Gold edged lower on Thursday, after touching a more than two-month high earlier in the session, as traders paused after a rally fuelled by cooling U.S. inflation, with attention turning to an upcoming producer price report for clues to prospects of near-term Federal Reserve rate hikes.
Spot gold fell 0.5% to $4,383.53 per ounce by 0601 GMT, after jumping about 1% to its highest since June 5. U.S. gold futures for December delivery fell 0.6% at $4,440.80.
"Gold is in consolidation mode today after its post-CPI gains, with near-term expectations of a Fed rate hike being dialled back another notch," said Tim Waterer, chief market analyst at KCM Trade.
"Traders appear content to wait for confirmation from the upcoming PPI data before committing to the next leg higher."
Prices have risen over 8% so far this month, as traders scale back U.S. interest rate hikes bets amid recent softer economic data.
The consumer price index rose 3.4% in the 12 months through July, down from 3.5% in June, in line with economists' expectations. Traders are now pricing in only a 40% chance of a hike at the September meeting, down from about 54% seen a week before, according to the CME FedWatch Tool.
Lower rates tend to support gold by lowering the opportunity cost of holding the non-yielding asset.
In other metals, spot silver lost about 0.3% to $65.09 per ounce, having climbed to its highest since June 22 in the previous session. -Reuters
Oman Observer is now on the WhatsApp channel. Click here
