Gold eases off 1-month peak as U.S. dollar, yields climb
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Gold retreated on Wednesday from a one-month peak scaled in the previous session, although prices flitted in a relatively tight range as cautious investors positioned ahead of U.S. inflation data due later this week.
Spot gold was down 0.2% at $1,709.60 per ounce, as of 0644 GMT. U.S. gold futures fell 0.2% to $1,712.30.
Bullion prices rose more than 2% to breach the key $1,700 level on Tuesday, following a fall in the dollar and bond yields as well as some technical buying.
"Gold prices are slightly lower due to a combination of factors. The dollar is little bit firm, yields are going up and there is some level of profit-taking after yesterday's rally," said Stephen Innes, managing partner at SPI Asset Management.
The dollar index edged up 0.1%, making gold more expensive for overseas buyers. U.S. Treasury yields also crept higher in Asian hours. [USD/][US/]
Investors' focus remains on the U.S. consumer price index report due on Thursday. The data is likely to offer cues on U.S. Federal Reserve's rate hike stance.
Wall Street economists expect a deceleration in both the monthly and yearly core consumer price index to 0.5% and 6.5%, respectively, according to a Reuters poll.
"Prices seem to be consolidating ahead of CPI. If the U.S. CPI print is hotter than expected, prices could move below $1,690 and if not gold might break the $1,725 level," Innes added.
Traders now see a 67% chance of a 50-basis-point rate hike and 33% chance of a 75 bps hike at the Fed's December meeting.
Gold is seen as a hedge against inflation, which rising rates aim to tackle, thereby diminishing the metal's appeal. Higher interest rates also make other assets more attractive compared with non-interest-bearing bullion.
Spot silver fell 0.2% at $21.29. Platinum rose 0.5% to $1,002.76, while palladium was down 0.9% at $1,903.59.
