Gold dips amid firm dollar, concerns over aggressive U.S. rate hikes


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Gold prices edged lower on Wednesday

after hotter-than-expected U.S. inflation data boosted the

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dollar and fueled expectations that the Federal Reserve will

continue on aggressive policy tightening path.

FUNDAMENTALS

* Spot gold fell 0.2% to $1,698.14 per ounce, as of

0120 GMT. Prices fell 1.3% on Tuesday, its biggest one-day

percentage decline since July 14.

* U.S. gold futures were down 0.4% at $1,710.

* The dollar index , which measures the currency

against six major peers, ticked 0.1% higher after recording its

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biggest one-day percentage gain since March 2020 overnight.

* Benchmark U.S. Treasury yields hovered close

to a near three-month peak touched on Tuesday.

* U.S. consumer prices unexpectedly rose in August and

underlying inflation accelerated amid rising costs for rents and

healthcare, giving the Fed ammunition to deliver a third 75

basis points interest rate hike next Wednesday.

* The Fed is likely to raise U.S. borrowing costs faster and

further than previously expected after the inflation data, with

Nomura’s economists saying they now believe a 100 basis-point

rate hike is the most likely outcome at the September meet.

* Even though gold is seen as a hedge against inflation,

higher interest rates increase the opportunity cost of holding

the bullion while boosts the dollar, in which the precious metal

is priced.

* Holdings of SPDR Gold Trust , the world’s largest

gold-backed exchange-traded fund, said its holdings fell 0.21%

to 962.88 tonnes on Tuesday from 964.91 tonnes on Monday.

* Spot silver dipped 0.2% to $19.29 per ounce.

Platinum edged 0.3% higher to $880.67 and palladium

fell 1% to $2,083.18.

DATA/EVENTS (GMT)

0600 UK CPI YY Aug

1230 US PPI Machine Manufacturing Aug

(Reporting by Eileen Soreng in Bengaluru; editing by

Uttaresh.V)



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