Gold ticks lower after Fed officials call for more rate hikes

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Gold reversed course to trade lower on

Wednesday as hawkish remarks from U.S. Federal Reserve officials

dampened hopes of a let-up in aggressive policy tightening after

tame inflation data.

Spot gold was down 0.3% to $1,788.39 per ounce by

3:34 p.m. ET (1934 GMT). It had risen to its highest since July

5 after the consumer price index (CPI) data.

U.S. gold futures settled up nearly 0.1% at $1,813.7.

Data showed U.S. consumer prices did not rise in July due to

a drop in gasoline costs, the first notable sign of a pause in

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inflation that has climbed over the past two years.

“Gold initially had a knee-jerk reaction after tamer

inflation data as investors expected a less aggressive Fed. But,

then they realized the data is tamer not tame,” said Jim

Wyckoff, senior analyst at Kitco Metals.

The metal, which tends to do well in a low-interest rate

environment, came under pressure after Minneapolis Fed President

Neel Kashkari and Chicago Fed President Charles Evans reaffirmed

an aggressive path for interest rate hikes.

Kashkari said the U.S. central bank will need to raise its

policy rate to 3.9% by year-end and to 4.4% by the end of 2023

to tame inflation.

Meanwhile, Goldman Sachs cut its price forecasts for the

metal, saying that “structurally, gold is likely to remain

range-bound as growth and tightening factors continue to offset

each other.”

Spot silver rose 0.2% to $20.53 per ounce, platinum

was up 0.7% to $939.97 while palladium jumped 1.5%

to $2,249.14.

(Reporting by Ashitha Shivaprasad and Seher Dareen in

Bengaluru; Editing by Shinjini Ganguli and Aditya Soni)

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