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Gold prices rose for a third straight session on Thursday as a softer dollar lifted bullion's appeal, while investors assessed whether higher inflation would prompt central banks to raise interest rates sooner than expected.

Spot gold rose 0.2% to $1,785.79 per ounce by 0355 GMT. US gold futures were up 0.1% at $1,786.20.

Bullion prices have traded between $1,748 and $1,800 so far this month with a weaker dollar on Thursday driving the metal closer to the higher end of this broad range.

Spot gold may bounce to $1,783 before dropping

A weaker dollar makes gold cheaper for buyers holding other currencies.

"Gold's overall direction really hasn't built momentum as it is unclear where real yields will land given uncertainty whether the Fed will act fast enough to contain inflation or if inflation will outpace the Fed's tightening," DailyFX currency strategist Ilya Spivak said.

"While the overall bias for gold points lower due to a rising yield environment, we're unlikely to get a strong directional push until it becomes clear how vigorously the Fed is going to act."

US benchmark 10-year yields hit their highest in five months, pressuring bullion as it translates into a higher opportunity cost for holding the metal which pays no interest.

Two US Federal Reserve officials said on Wednesday while the central bank should begin winding down its stimulus measures, it was too soon for interest rate hikes.

The Bank of England will be the first major central bank to raise interest rates in the post-pandemic cycle but economists polled by Reuters think the first hike will not come until early next year, later than markets are pricing in.

Gold is often considered an inflation hedge, though reduced stimulus and interest rate hikes push government bond yields up.

Spot silver rose 0.5% to $24.39 an ounce. Platinum gained 0.8% to $1,058.49 and palladium rose 0.9% to $2,089.60.

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