Gold prices were unchanged on Wednesday as caution prevailed ahead of US inflation data, which could influence the pace of Federal Reserve interest rate hikes.

* Spot gold was trading steady at $1,793.78 per ounce by 1032 GMT, having hit its highest since July 5 at $1,800.29 on Tuesday. US gold futures were down 0.1% at $1,809.90.

* “If the numbers confirm that inflation is going to subside, that could reduce the maximum potential for US interest rate hikes, and eventually support gold,” Saxo Bank analyst Ole Hansen said, attributing the slight pressure on prices early in the session to take profit.

* The gold market is pricing in a 75 basis point rate hike at the September meeting and any deviation from that number would weigh on prices, Hansen added.

* Economists polled by Reuters expect annual US inflation to have eased to 8.7% last month from 9.1% in June. Core inflation is expected to come in at 0.5% mom. The data will be published at 1230 GMT.

* Although gold is seen as a hedge against inflation, recession risks and political uncertainties, rising interest rates in the United States are clouding the appeal of non-interest bearing bullion.

* “Today’s inflation figure could set the tone for the markets for the rest of the month,” OANDA analyst Craig Erlam said in a note.

* “A lower-than-expected figure could be a major tailwind for markets, while anything around or above June’s reading could trigger a big risk reversal as the debate shifts to 75 or 100 basis points, leaving 50 in the rearview mirror.”

* The Fed has raised interest rates by 225 basis points since March in a bid to rein in high inflation.

* Among other precious metals, silver was down 0.2% at $20.46 an ounce, platinum was down 0.1% at $932.55 and palladium was down 0.3% at $2,208.09.

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