WASHINGTON (dpa-AFX) - Gold futures failed to hold early gains and settled slightly lower on Thursday as the dollar recovered from early lows.
The dollar index fell to 101.78 soon after the release of the data showing U.S. consumer price inflation rose less than expected in the month of July, and weekly jobless claims increased, raising hopes the Federal Reserve will leave interest rates unchanged at its September meeting.
However, the index recovered subsequently and was last seen at 102.60, gaining about 0.1%.
Gold futures for December ended lower by $1.70 at $1,948.90 an ounce.
Silver futures for September ended up $0.090 at $22.821 an ounce, while Copper futures for September settled at $3.7650 per pound, down $0.0185 from the previous close.
'Gold prices initially surged after soft inflation data, but those gains withered away as investors decided stocks would outperform. A peak in the dollar might be in place, but gold won't be surging if Wall Street continues to buy up stocks,' says Edward Moya, Senior Market Analyst at OANDA.
'Sentiment has been softening for gold as ETF holdings have dropped to the lowest levels since March. If the market becomes even more convinced that a soft landing is in place, gold will probably struggle,' Moya added.
Data from the Labor Department showed consumer prices accelerated to 3.2% in July from 3% in June, while economists had expected the pace of price growth to accelerate to 3.3%.
The Labor Department also said its consumer price index rose by 0.2% on a monthly basis in July, matching the uptick seen in June as well as expectations.
Excluding food and energy prices, core consumer prices also rose by 0.2% for the second straight month in July, in line with estimates. Meanwhile, the annual rate of growth by core consumer prices slowed to 4.7% in July from 4.8% in June. The rate of growth was expected to be unchanged.
While the data reinforced expectations the Federal Reserve will leave interest rates unchanged next month, economists suggested 'sticky' core inflation could leave the door open for the Fed to resume raising rates in November.
A separate Labor Department report showed first-time claims for U.S. unemployment benefits rose by much more than expected in the week ended August 5th.
The report said initial jobless claims climbed to 248,000, an increase of 21,000 from the previous week's unrevised level of 227,000. Economists had expected jobless claims to inch up to 230,000.
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