Investing.com - Gold prices eased slightly in Asia on Thursday as investors debated the prospect of China sharly trimming puchases of US Treasurys and whether the Bank of Japan is set to inch forward on a way out of its aggressive monetary policy.
Comex gold futures on the New York Mercantile Exchange dipped 0.06% to $1,318.50 a troy ounce.
Overnight, gold prices were hovering near four-month highs on Wednesday, as sentiment on the U.S. dollar weakened ahead of retail sales and inflation reports due at the end of the week.
The U.S. dollar received no support after official data on Wednesday showed that U.S. import prices rose less than expected in December, while export prices unexpectedly fell.
Market participants were now focusing on the release of U.S. inflation data due on Friday, for clues on the potential pace of rate hikes by the Federal Reserve.
The greenback had initially strengthened after San Francisco Fed President John Williams said on Saturday that the Fed should raise interest rates three times this year given that economy will benefit from tax cuts.
The comments came a day after Cleveland Fed President Loretta Mester said she expects about four interest rate hikes this year, thanks to solid U.S. economic growth and low unemployment.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.49% at 91.77, off the previous session's one-week high of 92.36.
Gold is sensitive to moves in both U.S. rates and the dollar. A weaker dollar makes gold less expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding non-yielding assets such as bullion.
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