Gold pressured by stronger dollar, with Nvidia, US inflation data in focus

Gold prices fell on Wednesday under pressure from a stronger dollar and uncertainty ahead of a key U.S. inflation report that could provide more clarity about the Federal Reserve's September policy meeting.

Spot gold was down 0.8 per cent at $2,504.25 an ounce by 1113 GMT. Prices on Tuesday rose 0.3 per cent to $2,524.57, a record high for the closing price.

The U.S. currency steadied on Wednesday, making dollar-priced commodities less attractive for buyers using other currencies. Recent declines in the dollar had pushed the currency to its weakest in more than a year.

The dollar index, which measures performance against a basket of currencies, was last up 0.34 per cent. [FRX/]

"There are a lot of moving parts today, and items like Nvidia results are hanging over the market for direction clues on (interest) rates," one gold trader said. "The Fed is rightly cautious right now and that's not helping people with direction. Cash is king today."

Markets are focused on the looming U.S. personal consumption expenditure (PCE) data, the Fed's preferred measure of inflation, due on Friday.

Gold is up 21 per cent so far this year, heading for the biggest annual growth since 2020, with support coming from expectations of U.S. rate cuts, safe-haven demand driven by geopolitical and economic uncertainty as well as robust purchases by central banks.

The rally, which started in March and saw spot prices hitting a record high of $2,531.60 on Aug. 20, was initially led by strong demand in China until high prices muted its imports and shifted the focus to Western investor buying.

With a rate cut widely expected, physically backed gold exchange-traded funds (ETFs) started purchases again after several years of outflows and are heading for a fourth consecutive month of inflows in August.

Gold ETFs saw modest net inflows of 8 metric tons ($403 million) last week, led by North American funds, according to the World Gold Council.

Among other precious metals, spot silver retreated by 1.8 per cent to $29.42 an ounce, platinum slipped by 1.4 per cent to $940.20 and palladium was down 1.3 per cent at $958.