Gold steadies near $1,800 as US inflation data fuels uncertainty

Gold held above the key psychological level of $1,800 on Wednesday, after a tamer-than-expected rise in US inflation led to uncertainty on when the US central bank would begin tapering its asset purchases.

Spot gold was steady at $1,802.92 per ounce as of 0318 GMT, after hitting a one-week peak of $1,808.50 on Tuesday.

US gold futures eased 0.2% to $1,804.30.

"With the CPI data coming in a bit lower than expected, for some that does push a possible (taper) announcement a little bit further down the road and that should be fairly supportive for gold prices," said ING analyst Warren Patterson.

Consumer Price Index (CPI) was up just 0.1% last month, compared with an expected increase of 0.3%. That was the smallest gain in six months suggesting that inflation had probably peaked, though it could remain high for a while amid persistent supply constraints.

The data has thrown a shade of uncertainty over the Federal Reserve's taper timeline as it is due to hold a two-day monetary policy meeting next week.

A growing number of policymakers have suggested the Fed could start scaling back asset purchases this year.

"Towards the end of this year we see gold prices down at $1,700... Once we get that taper announcement, all attention turns to when the Fed is going to start hiking rates," Warren added.

Higher interest rates raise the opportunity cost of holding gold, which pays no interest.

The CPI data weighed on the dollar index, while the benchmark US 10-year yield hit its lowest reading since Aug. 24 on Tuesday.

Elsewhere, silver fell 0.3% to $23.76 per ounce.

Platinum hit an over nine-month low of $926.26 and was last down 0.4% at $935.52.

Palladium dipped 0.3% to $1,971.91. Prices touched their lowest level since July 2020 at $1,935 in the previous session.