Gold ticks higher with focus on US inflation data, cenbank cues

Gold, Gold Prices

Gold prices gained on Monday, supported by a slight pullback in the dollar, with investors watching out for U.S. inflation data and major central bank policy meetings to shed light on the path of interest rate hikes.

Spot gold rose 0.2% to $1,853.89 per ounce by 1033 GMT, having slipped off a near one-month high of $1,873.79 on Friday.

U.S. gold futures were up 0.4% at $1,856.80.

The dollar index was down 0.2%, making bullion cheaper for holders of other currencies.

"It seems that the market has paused a little bit waiting for the next major driver," said Craig Erlam, senior market analyst at OANDA.

"The U.S. inflation data on Friday is going to be critical... If we see another reading this month that the inflation is falling more slowly than expected that could really dampen sentiment once more."

Safe-haven bullion is viewed as a hedge against inflation, although higher interest rates raise the opportunity cost of holding gold which yields no interest.

The U.S. consumer price index is forecast to have risen to 0.7% in May after rising 0.3% in April.

While the U.S. Federal Reserve is on track for half-a-point interest rate hikes at June and July policy meetings, a high inflation reading would add to expectations of aggressive tightening even in the second half of the year.

The European Central Bank meets on Thursday, while the Fed and Bank of England meetings are due next week.

Investors have ramped up their bets on ECB's interest rate hikes this year, and priced in a bigger, 50 basis-point hike by October.

On the technical front, spot gold may retest a resistance at $1,867 per ounce, a break above which could lead to a gain to $1,879, according to Reuters technical analyst Wang Tao.

Elsewhere, silver climbed 1.8% to $22.31 per ounce, palladium jumped 2.4% to $2,022.80 per ounce and platinum rose 1.6% to $1,029.76.