Gold trimmed losses after US inflation and labor market data strengthened bets that the Federal Reserve will cut interest rates next week. Consumer prices excluding food and energy rose 3.1% last month from a year earlier, in line with analysts' expectations, according to a Bureau of Labor Statistics report released Thursday (September 11).

Separate data showed US initial jobless claims jumped to their highest level in nearly four years. The mixed data bolstered traders' confidence that the US central bank will lower borrowing costs at its two-day meeting ending September 17.

Treasury bond yields and the US dollar weakened after the inflation report, helping bullion rise as much as 0.2% before losing some gains and trading lower.

Copper, a gauge of the global industrial economy that is also highly sensitive to Fed policy, also trimmed losses.

Traders now view a quarter-point rate cut at the Fed's September 16-17 meeting as a certainty, with two more similar cuts likely to follow by year-end, as policymakers seek to support the economy following a string of weak labor market data. Lower interest rates tend to benefit gold because it doesn't bear interest.

Gold bullion prices have risen nearly 40% this year, making it one of the best-performing major commodities. Rising expectations of a US interest rate cut have encouraged investors to pile into gold-backed exchange-traded funds, which has helped lift prices.

Gold fell 0.2% to $3,632.95 an ounce as of 9:16 a.m. in New York. The Bloomberg Dollar Spot Index was slightly lower. Silver edged lower, while platinum and palladium gained. Copper traded on the London Metal Exchange fell 0.1% to $9,999.60 a ton, and other metals were mixed, with aluminum up 1.1% and nickel down 0.5%. (alg)

Source: Bloomberg