Gold advances on inflation turmoil, dollar declines By Reuters

Arundhati Sarkar

(Reuters) – Prices rose on Wednesday, boosted by concerns about the economic impact of higher energy prices and a falling dollar, as investors prepared for a major report on inflation in the United States.

* At 1055 GMT, spot gold rose 0.72% to $1,772.42 an ounce, while US gold futures also rose 0.7% to $1,770.60 an ounce.

The yield on 10-year US Treasuries fell after hitting its highest level since June, while the dollar fell, making bullion more attractive to overseas buyers.

* The global economy is under inflationary pressures and “Gold is trying to show a small bullish run, but there isn’t much forward momentum in the price direction,” said Ole Hansen, analyst at Saxo Bank.

* “If the CPI data (from the US) surprises the upside and there is a little more volatility in the stock market, that could be a supportive factor for gold. But expectations of reduced monetary stimulus from the Federal Reserve are making gold stay in the restricted planes.”

* US consumer price data will be released at 1230 GMT and the minutes of the Federal Reserve’s September meeting will be released at 1800 GMT. Both reports will be released as the market becomes increasingly concerned about high inflation, fueled in large part by the global energy crisis.

* If inflation data, Federal Reserve minutes or other US economic reports fail to move gold prices significantly, the next catalyst will be the November meeting of the US central bank, an analyst said.

* Among other precious metals, it rose 1.2% to $22.81 an ounce. It was trading little changed, at $1,007.51 an ounce; It added 1.2% to $2,070.15 an ounce.

(Narrated by Arundhati Sarkar and Suhair Darin in Bengaluru, and edited in Spanish by Marion Giraldo)