Gold sheds gains as hot inflation figures, higher dollar weigh

By Vedika Thorat

Nov 11 (Reuters) - Gold prices fell on Wednesday, erasing earlier gains as hotter-than-anticipated inflation figures and hawkish comments from policymakers boosted the US dollar and highlighted probabilities of a bigger interest rate hike next month.

Spot gold fell 0.41% to $4,014.26 per ounce by 1447 GMT after climbing to as high as $4,066.77 earlier in the session. US gold futures for December delivery fell 0.2% to $4,021.70 per ounce.

"CPI came out a little hotter than expected, and the market is interpreting that it warrants higher rates at the December meeting," said Bob Haberkorn, senior market strategist at StoneX.

Gold fell about 3% to $4,013.29 on Tuesday after data showed US consumer prices rose more than expected in October, with the CPI increasing 0.4%. Economists polled by Reuters had forecast a 0.3% rise.

Ahead of the CPI data, Fed Governor Christopher Waller said a core inflation reading of 0.3% in October would prompt him to consider a half-point hike at the December meeting.

While markets are fully pricing in a 25 basis point hike in December, bets on a 50 basis point hike in December also rose to 13.2% from 0%, boosting the dollar to a four-week high. USD/

A higher dollar makes greenback-priced bullion more expensive for overseas buyers, while non-yielding bullion also loses its appeal to interest-bearing assets in a high-interest-rate environment.

However, Haberkorn said, "there's been strong buying in the third quarter of gold by central banks. That's really kept the floor on gold despite the short-term fundamental news, which is the Fed and interest rates working against it."

Among other metals, spot palladium gained 5.2% to $1,078.56 per ounce, having hit its highest level since October 22.

Palladium markets may have reached the point where autocatalyst demand erosion intersects with recovering secondary supply, turning a decade of scarcity into a persistent surplus, Deutsche Bank said in a note.

Spot silver rose 1.41% to $52.23 per ounce.