Gold moves in tight range as investors await inflation data

Gold prices were stuck in a narrow range on Monday, with cautious investors awaiting readings on U.S. consumer prices that could be crucial to Federal Reserve's decision on when to exit its super-supportive policy.

Spot gold rose 0.2% to $1,791.01 per ounce by 0318 GMT, after posting a weekly decline of 2.1%.

U.S. gold futures were flat at $1,791.90

"There's the belief that if the inflation does run away, the Fed will have to stamp on it and that means faster tapering and interest rate hikes sooner than expected. That won't be good for gold," IG Market analyst Kyle Rodda said.

Gold is in a range between $1,760 and $1,830 and that reflects a general indecision at the moment about virus, growth, inflation expectations and policy, Rodda added.

Data on Friday showed U.S. producer prices increased solidly in August, leading to the biggest annual gain in nearly 11 years.

The reading sent the benchmark U.S. 10-year Treasury yield higher and left gold down 2.1% for the week.

Higher yields translate into higher opportunity cost for holding non-interest bearing bullion.

The dollar index slightly strengthened in the Asian trade, making gold more expensive for holders of other currencies.

All eyes are now on consumer price index for August, due to be released on Tuesday, which is likely to show core inflation easing slightly to 4.2%.

Gold rises on weaker dollar

Cleveland Fed President Loretta Mester said on Friday that she would still like the central bank to begin tapering asset purchases this year, joining the chorus of policymakers with similar view.

Platinum rose 0.1% to $956.70 per ounce and touched its lowest level since November 2020.

Palladium hit its lowest level since August 2020, but recovered some lost ground to trade up 0.3% at $2,144.98.

Silver was steady at $23.71.