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Gold down after volatile Tuesday
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U.S. dollar index up 0.3%
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Fed seen raising rates to 5.263% after U.S. inflation data
(Adds details and updates prices)
By Kavya Guduru
Feb 15 (Reuters) - Gold prices fell on Wednesday on a
firmer dollar, while data showing the U.S. consumer prices last
month rose faster than expected reinforced investor concerns
that the Federal Reserve would persist with monetary policy
tightening.
Spot gold was down 0.6% at $1,843.79 per ounce, as of
0657 GMT, after falling to its lowest since early January on
Tuesday. U.S. gold futures fell 0.7% to $1,852.40.
Rising interest rates discourage investors from placing
money in non-yielding assets such as gold.
"A more-aggressive tightening path is more likely to weigh
on gold over the foreseeable future," said Matt Simpson, a
senior market analyst at City Index.
"But with bearish momentum slowing and gold's flat close (on
Tuesday) despite stronger inflation, perhaps the path of least
resistance points (to) slightly higher from current levels."
The U.S. consumer price index (CPI) increased 0.5% last
month, in line with expectations. In the 12 months through
January, the CPI increased 6.4%, which was the smallest gain
since October 2021, but slightly higher than expected. Fed officials said on Tuesday the U.S. central bank would
need to keep gradually raising interest rates to beat inflation.
"We must remain prepared to continue rate increases for a
longer period than previously anticipated" and "given the risks,
we shouldn't lock in on a peak interest rate or a precise path
of rates," Dallas Fed President Lorie Logan said.
Money markets expect the Fed's target rate to peak at 5.263%
in July from a current range of 4.50% to 4.75%. The dollar index rose 0.3%, making greenback-priced
gold more expensive for buyers holding other currencies. Spot silver lost 0.6% to $21.71 per ounce and
platinum fell 0.6% to $924.86.
Palladium was down 0.2% at $1,494.47 after hitting
its lowest level since August 2019 in the previous session.
(Reporting by Kavya Guduru in Bengaluru; Editing by Rashmi
Aich, Subhranshu Sahu and Sherry Jacob-Phillips)