Summary Gold rebounded from a six-month low as investors awaited U.S. PPI data. Rising inflation, rate hike expectations and escalating U.S.-Iran tensions kept markets on edge.
(Reuters) - Gold prices rebounded from a six-month low on Thursday on short-covering as investors awaited a key U.S. inflation report that could shed more light on the Fed policy outlook.
Spot gold rose 0.4% to $4,089.12 per ounce by 0215 GMT, after hitting its lowest since November 21 at $4,022.09 earlier in the day. U.S. gold futures for August delivery were down 0.5% at $4,111.10.
"With prices hurtling towards $4,000, it's an obvious level of support that could prompt bears to book a quick profit or tempt battered bulls from the sideline," said Matt Simpson, a senior analyst at StoneX.
"The US dollar index failed to gain much ground following Wednesday's CPI report. So, unless there are any nasty surprises in PPI - gold could be due a technical bounce over the near term."
Data showed that U.S. consumer inflation increased at its fastest pace in three years in May, boosted by surging prices for energy products amid the Middle East conflict.
Markets now await the May U.S. Producer Price Index data, due later in the day, to further assess the Federal Reserve's monetary policy stance.
While gold is viewed as a hedge against inflation, higher interest rates tend to weigh on the non-yielding metal.
Traders are now pricing in a more than 70% chance of a U.S. rate hike by December, according to the CME FedWatch tool. FEDWATCH
On the geopolitical front, the United States began a fresh round of strikes against multiple targets overnight in Iran, the U.S. military said on Wednesday, hours after President Donald Trump vowed new attacks if no peace deal is secured.
Oil prices climbed more than $2 on Thursday, as Iran declared the closure of the Strait of Hormuz following the U.S. strikes.
Spot silver rose 0.3% to $63.86 per ounce, platinum gained 0.6% to $1,673.75, and palladium climbed 2.2% to $1,239.89.
