Gold set for monthly loss as US inflation data awaited

Gold prices fell on Wednesday and are on track to record a monthly loss, pressured by expectations of interest-rate hikes on the precious metal, while investors awaited US inflation data for signs about the Federal Reserve's policy path.

Spot gold fell 0.2% to $4,170.63 an ounce at 01:50 GMT, having lost more than 6% since the start of September, while US gold futures rose 0.5% to $4,201.90.

The US Personal Consumption Expenditures (PCE) price index, an inflation gauge closely watched by the Federal Reserve, is due, at a time when the dollar is set for monthly gains, making dollar-priced gold more expensive for holders of other currencies.

Tony Seg, chief executive of Critical Metals, said inflation data will be an important test for gold given its potential impact on policy expectations, Treasury yields and the dollar.

Traders see a 47% chance of a rate hike in October and a 91% chance in December, after the Federal Reserve raised interest rates by 25 basis points this month.

In other precious metals, spot silver fell 0.8% to $60.98 an ounce, while platinum was steady at $1,705.10 and palladium fell 0.3% to $1,219.60. All three metals are also set to post monthly losses.