Gold slips in Europe

Gold retreated from the previous session's 3-1/2 month high on Thursday after a stronger than expected reading of US inflation drove the dollar higher versus the euro. The data, which showed a steady pick-up in underlying price pressures, revived speculation that the Federal Reserve may end its ultra-low interest rate policy later this year.
Spot gold was down 0.4 percent at $1,181.01 an ounce at 1341 GMT, while US gold futures for December delivery were up $1.50 an ounce at $1,181.30. The metal rallied 1.4 percent on Wednesday in a fourth day of gains as downbeat economic data from the United States and China fuelled expectations that the US central bank would postpone its first rate increase in nearly a decade.
Gold, which benefits from low interest rates that cut the opportunity cost of holding non-yielding assets, rallied to its highest since late June at $1,190 an ounce, picking up momentum as it broke chart resistance at its 200-day moving average. "Over the last couple of days the gold market has been pricing out the Fed (raising rates)... because of data weakness. Today's data wasn't as weak as expected, so there's a feeling that it maybe ran too fast," ABN Amro analyst Georgette Boele said.
The world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, said its holdings rose 7.7 tonnes on Wednesday, its first inflow since October 1 and the biggest of any day since February 2. "Once gold gets above $1,170 an ounce and the 200-day moving average, it puts it one the radar for institutional investors," Sharps Pixley chief executive Ross Norman said.
Physical buying of gold however softened due to the rise in prices. Premiums on the Shanghai Gold Exchange, an indication of demand in top consumer China, fell to about 50 cents an ounce on Thursday from $2-$3 in the previous session. Earlier in the day, the Chinese prices had even dipped to a small discount. A Reuters poll showed on Thursday that gold prices are still expected to post another year of losses in 2016, with more pain still in store for the precious metal this year after a weak third quarter.
Respondents to the poll also lowered their outlook for platinum prices next year after the metal plunged 16 percent in its biggest quarterly drop in seven years. Silver was down 0.3 percent at $16.07 an ounce, after touching its highest since late June in the previous session at $16.18 an ounce. Platinum was down 0.5 percent at $991.50 an ounce and palladium was up 0.7 percent at $702.22 an ounce.