PRECIOUS-Gold slips as dollar strengthens on 'transitory' inflation view

Reuters

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    * Gold slips below $1,900 per ounce mark
    * U.S. CPI rose 0.6% in May
    * Semiconductor shortage impact on PGMs limited -analyst

 (Adds comment, updates prices)
    By Nakul Iyer
    June 11 (Reuters) - Gold prices slipped on Friday, hurt by a
strengthening dollar as some investors bet that recent spikes in
U.S. consumer prices are temporary.
    Spot gold  XAU=  fell 1.2% to $1,875.31 per ounce by 2:01
p.m EDT (1801 GMT). U.S. gold futures  GCv1  settled 0.9% lower
at $1,879.6.
    The dollar index  .DXY  gained 0.6%, dimming gold's appeal
to investors holding other currencies.  USD/ 
    TD Securities commodity strategist Daniel Ghali said gold's
failure to break above $1,900 per ounce after U.S. non-farm
payrolls and CPI data suggests inflation hedging flows were
slowing at the same time as physical flows were weakening.
    "As a result a pullback in gold should unfold," Ghali said,
adding that while there could be a near-term pullback to $1,850
per ounce, gold in the medium-term should be supported by dovish
central bank policies for a prolonged period of time.
 urn:newsml:reuters.com:*:nL5N2NR47O
    Data on Thursday showed U.S. consumer prices rose sharply in
May, but analysts say the spike is likely "transitory" and
therefore fears over the Federal Reserve policy tightening have
ebbed.  urn:newsml:reuters.com:*:nL2N2NR2Q5
    On the physical front, dealers in top-hubs India and China
were forced to offer discounts to lure customers this week.
 GOL/AS  
    Market participants now eye next week's U.S Federal Reserve
policy meeting.  urn:newsml:reuters.com:*:nL2N2ER0O5
    Expectations that the Fed will stick to the "inflation is
transitory script" are high, but recent labour market
improvements and a "red-hot" inflation number raise the risk
that the Fed will be less dovish, Edward Moya, senior market
analyst at OANDA, wrote in a note.
    Palladium  XPD=  rose 0.2% to $2,783.10 per ounce and
platinum  XPT=  fell 0.3%, to $1,147.08 per ounce.
    Automobile companies had likely already anticipated the
impact of the global semiconductor shortage and replenished
their inventories of autocatalyst metals platinum and palladium,
limiting its impact on price, Ghali said.    
    Platinum and palladium are used as catalysts in vehicles to
reduce emissions. 
    Meanwhile, silver  XAG=  was steady at $27.96 an ounce.

 (Reporting by Nakul Iyer in Bengaluru; Editing by Kirsten
Donovan, Will Dunham and Jonathan Oatis)
 ((nakul.iyer@thomsonreuters.com;  Within U.S. +1 646 223 8780,
Outside U.S. +91 80 6749 0417; Reuters Messaging:
nakul.iyer.thomsonreuters.com@reuters.net))

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