Gold firms as dollar slips; U.S. consumer data in focus

Gold prices edged higher on Wednesday as the dollar slipped ahead of the release of October consumer inflation data from the United States later in the day that could provide hints on the Federal Reserve`s monetary tightening policy.

Spot gold was up 0.3 percent at $1,284.30 per ounce at 0811 GMT. On Tuesday, gold touched $1,270.56, its lowest since Nov. 6, before recovering to close 0.2 percent higher.

U.S. gold futures for December delivery gained 0.1 percent to $1,284.50.

"Gold is still stuck in a tight range as traders are waiting for additional signals before taking any view," ANZ analyst Daniel Hynes said.

"This (U.S. consumer inflation data) is one of the most important data, which could dictate sentiment leading into the next Fed meeting. Obviously, a rise in inflation is what the market is looking for ... but for now, it is taking a cautious approach," Hynes added.

The Federal Reserve should keep its benchmark interest rate at current levels until there is an upswing in inflation, St. Louis Fed President James Bullard said on Tuesday.

One of the newest Fed policymakers, Raphael Bostic, said he still backs a December interest-rate hike and that he would need to see further weakness in U.S. inflation and local signs of economic weakness to cause him to shelve expectations for gradual policy tightening.

Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.

"We expect the Fed to hike (interest rate) by 25 bps in December 2017 and given the unusually weak physical market, gold prices are likely to be subject to downside risk in the near term," Standard Chartered said in a note.

"The two key near-term drivers for gold remain the U.S. tax bill and the upcoming Federal Open Market Committee meeting."

U.S. Senate Republicans on Tuesday linked repealing a key component of Obamacare to their ambitious tax-cut plan, raising new political risks and uncertainties for the tax measure that financial markets have been monitoring closely for months.

Spot gold looks neutral in a range of $1,270-$1,286 per ounce, and an escape could suggest a direction, according to Reuters technical analyst Wang Tao.

The dollar index, which tracks the U.S. currency against a basket of six major rivals, fell 0.3 percent.

In other precious metals, silver gained 0.5 percent to $17.10 per ounce, while platinum was up 0.4 percent at $929.50.

Palladium, which touched a two-week low of $974.97 an ounce in the previous session, rose 0.2 percent to $987.30 an ounce.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)