Gold holds steady ahead of US inflation data

By Sukanya Mitra

Oct 14 (Reuters) - Gold was nearly steady on Wednesday as investors braced for US consumer price index (CPI) data due later in the day for clues on the Federal Reserve's monetary policy stance.

Spot gold was little changed at $4,151.51 per ounce by 0642 GMT. U.S. gold futures for December delivery held steady at $4,174.90.

"What we're looking at here is not a big move, it's within a range. But the fact that we are able to hold a range while oil is rallying suggests that gold is trying to find a reason to rally," said Ilya Spivak, head of global macro at Tastylive.

An administrative building belonging to Saudi Arabia's state-owned oil company Saudi Aramco in the eastern city of Dhahran was attacked, the Energy Ministry said, as fighting between Yemen's Iran-allied Houthis and the kingdom intensified. Oil prices rose on the news. O/R

If the upcoming US CPI, producer price index (PPI) and retail sales data point to weaker economic momentum, markets may scale back expectations for further rate hikes this year, providing a bullish catalyst for gold, Spivak said.

The US CPI report is due at 1230 GMT, followed by the PPI and retail sales data on Thursday.

New York Fed President John Williams reaffirmed his view that the US central bank may need to raise rates once more this year in its bid to lower inflation.

Fed Governor Christopher Waller said the recent rise in US bond yields reflects stronger economic growth rather than higher inflation expectations, which remain "well-anchored". US/

Markets see about a 22% chance of a US rate hike this month and a 90% probability of an increase in December, according to CME's FedWatch Tool.

Although gold is typically seen as a hedge against inflation, higher interest rates tend to diminish the appeal of non-yielding bullion.

Among other metals, spot silver fell 1.2% to $58.73 per ounce, platinum dipped 0.3% to $1,658.64 and palladium gained 0.7% to $1,133.53.