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PRECIOUS-Gold gains on inflation jitters, dollar dip
Published at 13/10/2021 at 11:40

* Tapering fears cap gold's advance - analysts

* U.S. consumer price inflation data due at 1230 GMT

* Dollar eases off more than one-year high

(Adds comment, updates prices)

By Arundhati Sarkar

Oct 13 (Reuters) - Gold rose on Wednesday, boosted by concerns of an economic hit from soaring energy prices and a retreat in the dollar, as investors braced for U.S. inflation data.

Spot gold rose 0.6% to $1,769.68 per ounce by 1024 GMT, while U.S. gold futures gained 0.7% to $1,770.60.

The benchmark U.S. 10-year Treasury yields eased from June highs, while the dollar retreated, making bullion cheaper for overseas buyers.

There are inflationary pressures on the global economy and "gold is attempting a small upside break, but there's not much in terms of momentum in the the price action", said Ole Hansen, an analyst at Saxo Bank.

"If the CPI data surprises to the upside, and there's little bit more volatility in stock market, it could be a supportive factor for gold. But expectations of tapering are holding gold down."

The U.S. consumer price inflation data due at 1230 GMT and the release of minutes from the U.S. Federal Reserve's September meeting at 1800 GMT, come amid fears that rising inflation, stoked in part by a global energy crisis, may stall growth.

"Given how the stagflation talks continue to drain global sentiment and promote risk aversion, this could support gold bugs," said FXTM analyst Lukman Otunuga.

Fed policymakers said on Tuesday the economy has healed enough for the central bank to begin withdrawing stimulus, cementing expectations for tapering as soon as next month.

Gold is considered an inflation hedge. However, reduced stimulus and interest rate hikes push government bond yields higher, translating into higher opportunity cost for holding non-yielding bullion.

If the inflation data, the FOMC minutes or other U.S. economic reports fail to significantly move gold prices, the next catalyst would be the Fed's November meeting, added Otunuga.

Spot silver rose 1.2% to $22.81 per ounce, platinum

was little changed at $1,007.51, and palladium rose 1.2% to $2,070.15.

(Reporting by Arundhati Sarkar and Seher Dareen in Bengaluru; Editing by Louise Heavens)

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