Gold prices subdued as investors await U.S. inflation data

Gold prices struggled for momentum on Wednesday, as investors refrained from making big bets ahead of U.S. inflation data that is expected to influence the pace of Federal Reserve rate hikes.

FUNDAMENTALS


* Spot gold was down 0.1% at $1,791.60 per ounce, as of 0127 GMT. U.S. gold futures were down 0.2% at $1,808.20.

* Analysts polled by Reuters expect U.S. annual inflation to have eased to 8.7% in July from 9.1% in June. Core inflation is expected at 0.5% month-on-month . The data is due at 1230 GMT.

* The Fed hiked rates by 75 basis points each in June and July to rein in soaring inflation. Although gold is seen as a hedge against inflation, higher U.S. interest rates dull non-yielding bullion’s appeal.

* Fed funds futures traders are now pricing for a 69.5% chance of another 75-basis-point rate increase at the U.S. central bank’s next policy meeting in September.

* The dollar index held firm against its rivals, making gold less appealing for other currency holders.

* Benchmark U.S. 10-year Treasury yields edged higher to 2.7883%, increasing the opportunity cost of holding non-interest bearing gold.

* Japanese wholesale prices rose 8.6% in July from a year earlier, data showed, slowing from the previous month’s pace in a sign inflationary pressure from higher fuel and raw material costs was easing.

* Spot silver eased 0.1% to $20.48 per ounce, platinum was steady at $933.59, and palladium was unchanged at $2,215.29.

DATA/EVENTS (GMT, July)

0130 China PPI, CPI YY

0600 Germany HICP Final YY

1230 US CPI MM, SA

1230 US CPI Wage Earner