Gold prices dip as dollar rally dims appeal

NEW DELHI, May 12 (Reuters): Gold prices inched lower on Thursday as the dollar scaled a fresh two-decade peak after April US inflation data bolstered expectations that the Federal Reserve would stick to its aggressive rate-hike roadmap.
Spot gold fell 0.2 per cent to $1,848.15 per ounce. US gold futures were down 0.2 per cent at $1,849.20.
"We would expect gold to get support from the higher inflation environment ... The dollar has actually gained quite a bit since the CPI print and that's prohibiting gold from making gains," WisdomTree analyst Nitesh Shah said.
The US dollar index rose to fresh two-decade highs on as concerns that tighter monetary policies to tame surging inflation will hurt the global economy dampened risk sentiment and drove investors into the safe-haven currency.
The inflation reading comes on the heels of the Fed raising its benchmark overnight interest rate by an aggressive half-a-per centage point last week, the most in 22 years.
There is also the risk of central banks overdoing it and posing recessionary risks which could support gold, Shah added.
Spot silver fell 1.4 per cent to $21.25 per ounce, platinum dropped 2.6 per cent to $966.21 and palladium slid 3.2 per cent to $1,969.85.