KONTAN.CO.ID - JAKARTA. Gold prices clawed higher from one-month lows on Thursday as the dollar retreated ahead of the make-or-break U.S. inflation data that would shape the Federal Reserve's upcoming interest rate decisions.

Spot gold rose 0.2% to $1,918.24 per ounce by 0752 GMT, hovering near its lowest level since July 10 hit on Wednesday. U.S. gold futures were flat at $1,951.

U.S. consumer price index (CPI) data, due at 1230 GMT, is expected to show inflation slightly accelerated in July.

"While it is widely expected for U.S. headline to bounce on y/y terms, the focus is on core. Any larger-than-expected downside drag could help reinforce the disinflation trend and provide some support for gold prices," said OCBC Executive Director and FX Strategist Christopher Wong.

High interest rates have raised the opportunity cost of holding non-yielding bullion, which has declined than 7% since reaching near record highs in May.

"The removal of this bearish factor should give gold bulls a 'green' light to start pushing prices higher again," said Kirill Kirilenko, a senior analyst at London-based consultancy CRU.

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However, with core PCE inflation still too high despite showing signs of cooling, and labour market remaining tight, the Fed may not be ready to start loosening this year, Kirilenko highlighted.

Traders see an 86.5% chance of no rate hike at the Fed's next policy meeting in September, and expect the central bank's following move to be a rate cut, likely in spring of 2024.

"Outlook for gold would regain shine when markets move in to price in greater probability of rate cuts and U.S. dollar softness. And this hinges on how entrenched the disinflation trend is," OCBC's Wong added.

Reflecting investor interest in bullion, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell to the lowest level since March.

Spot silver climbed 0.6% to $22.81 per ounce, platinum jumped 1.5% to $901.45 and palladium gained 0.8% to $1,245.03.

Editor: Wahyu T.Rahmawati