(Bloomberg) -- Gold steadied near the lowest in more than nine months as the dollar edged higher in the run-up to US inflation data this week that's set to shape the magnitude of the Federal Reserve's next rate hike.
Investors concerned about the prospect of a global economic downturn have turned in droves to the greenback, which is already up more than 2% this month. That's capped gold, despite support from an easing in US Treasury yields.
Gold has ridden a roller-coaster this year as Russia's invasion of Ukraine spurred a rally in the haven to well above $2,000 an ounce in March, only for the momentum to fade as the growth and inflation outlook shifted. In recent weeks, investors have cut holdings in bullion-backed exchange-traded funds.
US inflation figures this week may stiffen the resolve of Fed policy makers to proceed with another big increase in interest rates later this month. Economists estimate the gauge climbed 8.8% in June from a year-earlier to a fresh four-decade high.
“If it's a huge drop that would chop markets,” said Liberum Capital analyst Tom Price. “Gold's not moving much because the institutional dudes are just waiting for the next FOMC.”
Spot gold was little changed at $1,734.39 an ounce at 1:32 p.m. in London, after earlier falling to as little as $1,723.32, the lowest intraday price since Sept. 30. The Bloomberg Dollar Spot Index was 0.1% higher, as spot silver, platinum and palladium retreated.
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