Gold weakened slightly on Thursday (September 11), but held near record highs well above $3,600, as a modest dollar recovery and profit-taking weighed on prices, while investors awaited US consumer inflation data due later in the day.

Spot gold fell 0.3% to $3,629.23 an ounce, as of 08:11 GMT. Bullion hit a record high of $3,673.95 on Tuesday. US gold futures for December delivery fell 0.4% to $3,666.70.

The US dollar index rose 0.2% to a near one-week high against a basket of major currencies, making dollar-priced gold more expensive for overseas buyers. "Gold appears to be under some pressure from the dollar's stabilization and profit-taking today. Nonetheless, the precious metal remains bullish above the psychological $3,600 level, with yesterday's surprise drop in US producer prices limiting the downside," said Lukman Otunuga, senior research analyst at FXTM.

US producer prices unexpectedly fell in August due to lower trade margins and a modest increase in the cost of goods, data released on Thursday showed. Last week's weaker-than-expected non-farm payrolls data, along with revised estimates showing 911,000 fewer jobs in the 12 months to March, have strengthened expectations of monetary easing.

Investors now await US weekly jobless claims and CPI data, due at 12:30 GMT. A Reuters poll forecasts a 0.3% monthly increase in consumer prices in August and a 2.9% year-on-year increase in CPI, compared with 2.7% in July.

"Signs of rising inflationary pressures could influence speculation about a Fed rate cut in October. This could trigger a sell-off that could drag gold back to the $3,500 level. However, a weak CPI figure could push gold to a new record high," Otunuga added.

The Fed is widely expected to cut rates by 25 basis points at its meeting next Wednesday, while investors are also pricing in an 8% chance of a 50 basis point cut, according to CME FedWatch. Lower interest rates typically support non-yielding gold. Elsewhere, spot silver fell 0.2% to $41.05 an ounce. Platinum fell 0.6% to $1,377.37, and palladium fell 0.1% to $1,172.45. (alg)

Source: Reuters