Gold dips after US inflation data sparks jumbo rate hike concerns

FUNDAMENTALS

Spot gold fell 0.4% to $1,728.39 per ounce by 0100 GMT. U.S. gold futures dropped 0.5% to $1,726.60.

The dollar edged up towards 20-year highs, hurting demand for greenback-priced gold among buyers holding other currencies.

* Benchmark U.S. 10-year Treasury yields rose, weighing on appetite for zero-yield gold. U.S. annual consumer prices jumped 9.1% in June, the sharpest spike in more than four decades, leaving Americans to dig deeper to pay for gasoline, food, healthcare and rents.

Markets swung wildly on Wednesday, as the euro touched parity versus the dollar for the first time in 20 years, while investors also feared larger Fed rate hikes could be on the way. The Fed is seen ramping up its battle with sky-high inflation with a supersized 100 basis points rate hike at its upcoming policy meeting on July 26-27.

* Although gold is seen as an inflation hedge, higher rates hurt the appeal of bullion, which bears no interest. A rallying dollar sent gold prices to a near one-year low on Wednesday following the inflation report, but a retreat in the greenback helped bullion make a sharp recovery and end the session higher. SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.17% to 1,019.79 tonnes on Wednesday from 1,021.53 tonnes on Tuesday.

Spot silver fell 0.4% to $19.11 per ounce, platinum slipped 0.8% to $847.75, and palladium eased 0.5% to $1,964.74.

DATA/EVENTS (GMT)


0130 Australia Employment June

0130 Australia Unemployment Rate June

1230 US Initial Jobless Clm Weekly