Gold prices climbed higher on Wednesday, as the dollar retreated despite data showing a faster-than-expected acceleration in U.S. consumer price inflation.
The dollar, which moved higher after the release of U.S. inflation data, turned weak subsequently and shed ground against some major rivals.
The dollar index, which rose to 108.58, dropped to 107.48 before recovering to 107.76, down nearly 0.3% from the previous close.
Gold futures for August ended higher by $10.70 or about 0.7% at $1,735.50 an ounce, recovering smartly from a low of $1,704.50.
Silver futures for September ended up by $0.236 at $19.194 an ounce, while Copper futures for September settled with a gain of $0.0345 at $3.3225 per pound.
Data from the U.S. Labor Department showed that the consumer price index shot up by 1.3% in June after jumping by 1% in May. Economists had expected consumer prices to leap by 1.1%.
With the bigger than expected monthly surge, the annual rate of consumer price growth accelerated to 9.1% in June, reflecting the biggest increase since November 1981. Economists had expected the annual rate of consumer price growth to accelerate to 8.8% in June from 8.6% in May.
The red-hot inflation data supported expectations for a more aggressive tightening path from the Fed in the coming months.
It is feared that aggressive policy tightening by the central bank could significantly slow down economic growth.
