Gold falls ahead of U.S. inflation data on firm yields, dollar

Spot gold was down 0.6% at $1,826.89 per ounce by 0313 GMT

  
Image used for illustrator purpose Gold bars and coins are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, August 14, 2019.

Image used for illustrator purpose Gold bars and coins are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, August 14, 2019.

REUTERS/Michael Dalder

Gold prices fell on Wednesday, weighed down by higher U.S. Treasury yields and a slight rebound in the dollar ahead of the much-awaited U.S. consumer price data due later in the day.

Spot gold was down 0.6% at $1,826.89 per ounce by 0313 GMT. U.S. gold futures eased 0.5% to $1,826.20.

"The dollar has strengthened a little bit... if the inflation rate is higher than expected, it could encourage central banks to consider tightening their monetary policies faster than expected," said Margaret Yang, a strategist at DailyFX.

The dollar index was up 0.3%, making gold less appealing for other currency holders. 

Concerns of a potential acceleration in inflation dragged down the U.S. currency to a more than two-month low in the previous session and drove Asian shares to one-month lows earlier on Wednesday. 

The U.S. consumer price data due at 1230 GMT is keenly awaited by market participants to gauge inflationary pressure.

Benchmark U.S. 10-year Treasury yields scaled a more than one-week peak, increasing the opportunity cost of holding gold.

Some investors view gold as a hedge against higher inflation that could follow stimulus measures, but higher Treasury yields have weighed on non-yielding bullion's appeal this year.

Fed officials grappled on Tuesday with April's unexpectedly weak employment growth, maintaining faith in the U.S. economic recovery but acknowledging the pace of the jobs recovery may prove choppier than anticipated. 

Data on Tuesday showed U.S. job openings surged to a record in March, reiterating that a shortage of workers was hampering job growth, even as nearly 10 million Americans are looking for employment. 

Palladium rose 0.2% to $2,944.02 per ounce. Silver fell 1.1% to $27.34 per ounce, while platinum slipped 0.7% to $1,226.82.

(Reporting by Shreyansi Singh in Bengaluru; Editing by Rashmi Aich and Subhranshu Sahu) ((Shreyansi.Singh@thomsonreuters.com; +91 8061823666/3590 (If within U.S. call +1 646 223 8780); Reuters Messaging: Shreyansi.Singh@thomsonreuters.com))

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