Gold steady after US Inflation spurs biggest drop in 2 months

Gold slipped below $1,700 an ounce after closing down the most in two months in the wake of higher-than-expected US inflation data.

Bullion ended 1.3% lower on Tuesday after the consumer-price index figures were released. It had been on an upward trend this month before the inflation data surprised markets.

Economists had expected the CPI to rise 8.1% in August from a year earlier, but the actual figure was 8.3%, prompting stocks to plummet and the dollar and Treasury yields to surge.

Gold dipped below the $1,700 mark has been seen by some market analysts as a floor for the gold price so far this month. That threshold could be threated as the CPI report will keep the Federal Reserve on a hawkish track ahead of its meeting next week. Higher rates tend to weigh on non-interest bearing bullion.

Gold was down 0.2% to $1,698.30 an ounce at 9:25 a.m. in Singapore. The Bloomberg Dollar Spot Index was steady after rising 1.2% on Tuesday. Spot silver and palladium declined, while platinum was flat.