Gold prices shed more than 1.0 per cent on Thursday, hovering near a one-year low, as the dollar extended its blistering rally after a hot U.S. inflation print cemented expectations around an aggressive Federal Reserve rate hike, reports Reuters.
Gold, which pays no interest, tends to be pressured when interest rates rise as this increases the opportunity cost of holding bullion.
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Spot gold fell 1.1 per cent to $1,716.69 per ounce by 0903 GMT, after hitting its lowest since August 2021 on Wednesday.
U.S. gold futures were down 1.2 per cent to $1,714.40.
"Gold is lower amid fresh attempts to send the dollar higher, especially against the yen while EUR/USD is holding above parity," Saxo Bank analyst Ole Hansen said.
"The metal found a bid following yesterday's CPI shocker on concerns that rapid rising rates would lead to stagflation. For now, the main focus remains the dollar as it sends signals about the pace of US rate hikes and the markets overall risk appetite."
Rival safe-haven dollar notched a 20-year high, hurting demand for greenback-priced gold among buyers holding other currencies, as risk sentiment among investors remained weak as aggressive rate hikes loomed.
Traders are pricing in a 100-basis-point rate hike by the U.S. central bank at its upcoming policy meeting on July 26-27 to curb inflationary pressures. A hike of at least 75 basis points is seen as almost certain.
Data on Wednesday showed U.S. annual consumer prices jumped 9.1 per cent in June, the sharpest spike in more than four decades.
Also weighing on gold, benchmark U.S. 10-year Treasury yields rose.
Among other precious metals, spot silver dipped 1.4 per cent to $18.92 per ounce, platinum fell 2.1 per cent to $836.88 and palladium slipped 1.7 per cent to $1,941.30.
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