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Spot gold inched 0.1% lower to $1,749.62 per ounce by 0329 GMT, having recorded it biggest one-day percentage gain since May 6 on Wednesday. U.S. gold futures were down 0.1% at $1,751.00.
Gold prices steadied on Thursday after rising quite 1% within the previous session, as worries of an early tapering in economic support eased after data showed U.S. consumer price inflation cooled in July.
Spot gold inched 0.1% lower to $1,749.62 per ounce by 0329 GMT, having recorded its biggest one-day percentage gain since May 6 on Wednesday. U.S. gold futures were down 0.1% at $1,751.00.
U.S. consumer price increases slowed in July, data showed on Wednesday, although they remained at a 13-year high on a yearly basis, underpinning the Federal Reserve’s argument that inflationary pressures are likely to be transitory.
”There may be a slightly lower risk that the Fed will need to tighten policy aggressively to cap potentially runaway inflation,” said Kyle Rhoda, an analyst at IG Market.
However, the downward trend in gold is probably going to persist, Rhoda added.
Meanwhile, a growing number of U.S. financial institution officials are discussing how and once they should begin to trim the huge pandemic-era asset purchases.
The Fed has made labor market recovery a condition for phasing out its asset purchase program and raising interest rates.
While gold is viewed as a hedge against higher inflation, it's sensitive to rising U.S. interest rates, which increase the chance cost of holding non-yielding bullion while boosting the dollar.
”It is perfectly possible that gold has heavily factored in tapering as inevitable. What could also be a negative going forward could be a fast-paced tapering,” James Steel, chief precious metals analyst at HSBC wrote during a note.
”Gold is probably going to carry or build a base to travel modestly higher,” Steel added.
The dollar index, meanwhile, was flat and hovered below a quite four-month high hit on Wednesday.
Silver fell 0.5% to $23.40 per ounce. Platinum eased 0.2%, to $1,014.99 and palladium was down 0.1% to $2,633.19.
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