Gold declines as dollar rises after US inflation data

Gold prices edged lower on Thursday, as US inflation data that came in higher than expected and hawkish remarks from the Federal Reserve boosted the dollar to near its highest level in a month and reinforced expectations of an interest rate hike next month, weighing on the precious metal.

By 00:22 GMT, spot gold fell 0.2 percent to $3,979.09 per ounce, while US December gold futures dropped 0.4 percent to $3,984.50.

The dollar held near its monthly peak against major currencies at the start of Asian trading, making dollar-priced gold more expensive for holders of other currencies.

The odds of a half-percentage-point US interest rate hike next month rose after data showed US inflation accelerated more than expected in October, and policymakers hinted at their readiness to tighten monetary policy.

Although gold is typically viewed as a hedge against inflation, higher interest rates increase the opportunity cost of holding non-yielding gold, reducing its appeal to investors.

Among other precious metals, spot silver fell 0.6 percent to $51.40 per ounce, and palladium declined 0.3 percent to $1,024.48.