Gold prices pared gains on Thursday as dollar and Treasury yields ticked higher after US consumer prices rose more than expected in September and raised worries that the Federal Reserve could keep rates higher for some time, reports Reuters.
Spot gold rose 0.2 per cent to $1,877.51 per ounce by 9:30 am ET (1330 GMT), after hitting its highest level since Sept 27 earlier in the session. US gold futures were up 0.2 per cent at $1,890.40.
The consumer price index increased 0.4 per cent last month after a 0.3 per cent gain in August, the Labour Department said. However, year-on-year consumer prices have come down from a peak of 9.1 per cent in June 2022.
"The warm CPI print might be enough to slow gold's formidable rally into a consolidation but in itself shouldn't trigger a serious selloff especially given high geopolitical tensions," said Tai Wong, a New York-based independent metals trader.
Traders now see a 40 per cent probability of a rate hike in December from the Fed, according to CME Fedwatch tool, compared with about a 28 per cent chance seen before the report.
US benchmark 10-year yields and dollar index rose after the data.
Offering support to safe-haven gold, the escalating conflict between Israel and Palestinian militant Islamist group Hamas has kept investors on the edge.
Gold is used as a safe investment during times of political and financial uncertainty, but higher interest rates raise the opportunity cost of holding non-yielding bullion.
"There are still some signs that there is a slowdown in the U.S. economy, this should benefit gold. I anticipate prices could trade in the $1,860-$1,920 range in the near term," said Edward Moya, senior market analyst at OANDA.
Elsewhere, spot silver firmed 0.3 per cent to $22.13 per ounce, platinum fell 0.6 per cent to $879.33, while palladium fell 1 per cent to $1,155.83.
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