Gold prices slipped on Thursday morning, with bullion's outlook hurt by fears the US Federal Reserve could go for a more aggressive interest rate hike this month to fight sky-rocketing inflation.

Spot gold fell 0.24 per cent to $1,726.92 per ounce by 9.08am UAE time.

In the UAE, 24K was trading at Dh209.25 per gram at the opening of the market on Thursday. While 22K, 21K and 18K were trading at Dh196.75, Dh187.5 and Dh160.75 per gram, respectively.

Data released on Wednesday showed US annual consumer prices jumped 9.1 per cent in June, the sharpest spike in more than four decades.

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 marginally higher.

Jeffrey Halley, senior market analyst at Oanda, believes that a US dollar correction is on the way, hence, some short-term relief may also be coming gold's way, allowing it to rally somewhat.

"Gold appears to be trying to trace out a temporary bottom at the $1,707.00 area, with $1,700 and longer-term support at $1,675 an ounce looking safe for now. Failure of $1,675 still signals more pain ahead, though. Gold has resistance at $1,745, now a double top. That is followed by $1,780, and $1,800, its June downward trendline," said Halley.

 

"The CPI release generated volatility but not direction," said Ilya Spivak, a currency strategist at DailyFX, reasoning that markets now likely expected the Fed to front-load rates more, and not necessarily tighten more overall, but said gold still had a bearish outlook.

 

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