Gold slips as investors gear up for US inflation report

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  • U.S. Aug CPI data due at 1230 GMT
  • Spot gold may retest support at $1,905 – technicals

By Swati Verma

Sept 13 (Reuters) – Gold prices slipped on Wednesday, but held above an over two-week low hit in the previous session, with markets awaiting U.S. inflation data, which could offer insights into whether the Federal Reserve will further hike interest rates and for how long.

Spot gold Xwas down 0.1% to $1,910.87 per ounce by 0514 GMT, having touched its lowest level since Aug. 25 at $1,906.50 on Tuesday. U.S. gold futures GCcv1 slid 0.1% to $1,933.30.

The U.S. Consumer Price Index (CPI) data is due at 1230 GMT and with energy prices on the rise, expectations are for headline inflation figures to come in stronger.

“If inflationary data for the U.S. comes in much hotter-than-expected, the U.S. 10-year Treasury yield is likely to inch higher and put a damper on gold,” said Kelvin Wong, senior market analyst, Asia Pacific, at OANDA.

Benchmark 10-year bond yields were up 0.2% amid expectations that rates will stay higher for longer, keeping the U.S. dollar underpinned and capping bullion’s upside.

While the Fed is expected to leave rates unchanged at its Sept. 19-20 policy meeting, the central bank will probably wait until the April-June period of 2024 or later before cutting it, according to economists in a Reuters poll.

Bullion is highly sensitive to rising rates as they increase the opportunity cost of holding non-yielding bullion.

The European Central Bank also expects inflation to remain above 3% next year, bolstering the case for a tenth consecutive rate hike on Thursday, as per a source.

Spot gold may retest a support at $1,905 per ounce, with a good chance of breaking below this level and falling towards $1,898, according to Reuters technical analyst Wang Tao.

Elsewhere, spot silver shed 0.8% to $22.92 per ounce, platinum fell 0.5% to $905.49 and palladium dropped 0.8% to $1,230.44.

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