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Gold eases ahead of ECB decision

The yellow metal hits one-week low at $1,875.89/oz

June 11, 2021 00:00:00

Gold prices fell on Thursday, pressured by a firm dollar as investors awaited US inflation data to gauge the Federal Reserve's monetary policy stance as well as a European Central Bank meeting, reports Reuters.

Spot gold fell 0.4 per cent to $1,880.17 per ounce by 0949 GMT on the day, having earlier hit its lowest level since June 04 at $1,875.89. US gold futures fell 0.7 per cent to $1,883.30 per ounce.

"Further signs of inflationary pressures could sweeten appetite for gold ... However, upside gains may be capped by an appreciating dollar if inflation fears send US Treasury yields climbing," said Lukman Otunuga, senior research analyst at FXTM.

Higher yields threaten gold's appeal as an inflation hedge as they raise the opportunity cost of holding non interest-bearing bullion.

The much anticipated US consumer price index data is due, after last month's report showed consumer prices increased by the most in nearly 12 years in April. Economists polled by Reuters estimate CPI rose 0.4 per cent in May.

"There is a sense in the market that the Fed got the market under control saying that the inflation is transitory, so that's the whole focus right now, whether that can be achieved or not," said Ole Hansen, head of commodity strategy at Saxo Bank.

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