Gold ticks up on softer dollar, spotlight on US inflation data

Aug 9 (Reuters) – Gold prices gained on Tuesday supported by a softer dollar, while market participants awaited US inflation data for cues on the Federal Reserve’s policy tightening path.

Spot gold rose 0.4% to USD 1,794.64 per ounce by 2:11 p.m. ET (1811 GMT), while US gold futures also settled up 0.4% at USD 1,812.3.

A weaker greenback makes gold less expensive for overseas buyers. The dollar index was down 0.1%.

Gold is currently benefiting from a softer dollar and the Russia-Ukraine situation, while the focus is on what happens with CPI on Wednesday, said Daniel Pavilonis, senior market strategist at RJO Futures.

The US consumer price report for July is due at 8:30 a.m. ET (1230 GMT) on Wednesday. A New York Federal Reserve survey showed on Monday that US consumers’ expectations for where inflation will be in a year and three years dropped sharply in July.

Lately, gold has been facing pressure as various central banks have been hiking interest rates to tame surging inflation. The precious metal is considered a hedge against inflation and political uncertainties, but higher rates make non-yielding bullion less attractive.

“A softer inflation number tomorrow, particularly on the core side, could be the catalyst (for gold prices) for a breakout to the upside, while a stronger number could put USD 1,800 out of reach for the foreseeable future,” OANDA analyst Craig Erlam said in a note.

Ahead of the inflation report, analysts polled by Reuters expect annual inflation to have eased to 8.7% from 9.1% in June.

Meanwhile, the Bank of England will probably have to raise interest rates further to tackle inflation pressures that are gaining a foothold in Britain’s economy, BoE Deputy Governor Dave Ramsden said.

Spot silver fell 0.8% to USD 20.49 per ounce, platinum XPT= was down 0.9% at USD 931.50 and palladium inched 0.2% lower to USD 2,226.19.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Shailesh Kuber and Shounak Dasgupta)