Gold slips as strong US inflation data bolsters dollar, Fed hike expectations

Gold prices edged lower on Thursday as hotter-than-expected US inflation data and hawkish Federal Reserve commentary lifted the dollar to near a one-month high and reinforced expectations of an interest-rate increase next month, weighing on bullion.

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FUNDAMENTALS

* Spot gold was down 0.2% at $3,979.09 per ounce by 0022 GMT, while US gold futures for December delivery dropped 0.4% to $3,984.50.

* The dollar held near a one-month high against major peers in early Asian trading, making greenback-priced bullion more expensive for holders of other currencies.

* The odds of a half-percentage-point Fed rate hike next month surged after data showed US inflation accelerated more than expected in October and policymakers signalled a willingness to tighten policy more aggressively.

* Traders are pricing in a 100% probability of a rate increase in December, according to CME's FedWatch tool.

* Although gold is typically seen as an inflation hedge, higher interest rates increase the opportunity cost of holding non-yielding bullion, reducing its appeal to investors.

* Iran will not allow a single particle of enriched nuclear material to leave the country and there will be consequences in the event of any new US strikes on the Islamic Republic, Iranian security chief Mohsen Rezaei said in televised remarks.

* Elsewhere, Bank of England policymaker Megan Greene said on Wednesday it was appropriate to "proactively tighten our monetary policy stance" to ward against the risk of wage growth getting stuck at higher levels and firms passing those costs on.

* Among other metals, spot silver fell 0.6% to $51.40 per ounce and palladium dipped 0.3% to $1,024.48.