Gold near 3-week high on softer dollar, eyes on US inflation data

• Summary

• Companies

• Dollar down 0.2% to two-month low

• Central bank gold purchases likely helping the metal - analyst

• UK wage growth matches record high, keeping BoE under pressure

July 11 (Reuters) - Gold prices climbed to a near three-week high on Tuesday as the dollar slipped to a two-month low, while investors positioned for the U.S. inflation data that could have a bearing on the Federal Reserves rate hike path.

Spot gold rose 0.6% to $1,935.99 per ounce by 0821 GMT. U.S. gold futures gained 0.6% to $1,941.60.

\“The reaction to the US inflation data is dependent on how fast it is slowing down... only if inflation surprises on the downside gold would benefit, as it would indicate a sooner end in the Fed hiking cycle,\” UBS analyst Giovanni Staunovo said.

Safe-haven gold tends to gain during times of economic or financial uncertainty, while lower rates also lift the appeal of the zero-yield asset.

Bullion is being supported by a weaker dollar as the Fed seems to imply that theyre at the end of the tightening cycle, \“but gold bugs appear hesitant to over-commit ahead of Wednesdays U.S. inflation report,\” said Matt Simpson, senior market analyst at City Index.

The dollar index (.DXY) touched its lowest level since May 11, making gold cheaper for holders of other currencies.

Several U.S. central bank officials on Monday said the Fed will likely need to raise interest rates further to bring down inflation, but the end to its current monetary policy tightening cycle is getting close.

\“Also ongoing central bank gold purchases is likely helping the yellow metal,\” UBSs Staunovo added.

Elsewhere, a key measure of British wages matched its highest growth rate on record. But there were also some signs that the inflationary heat in the labour market is subsiding, offering the prospect of some relief ahead for the Bank of England.

Among other precious metals, spot silver rose 0.4% to $23.1961 per ounce, platinum gained 0.4% to $930.40, while palladium fell 0.1% to $1,239.06.