Gold eases in Europe on dollar reaction to US data

Gold lost ground in Europe on Thursday, but losses were limited on the dollar's muted reaction to US inflation data that suggested the Federal Reserve would stick to a measured pace of interest rate rises, dealers said.
Spot gold fell to $403.05/403.80 per troy ounce by 1453 GMT, compared with $404.25/405.00 quoted late in New York on Wednesday.
"It took a while for gold to react on the slightly higher dollar. Although some selling came in slightly above $405, the metal held remarkably well," a European dealer said.
"As long as the metal holds above the support at $402, the uptrend is still intact," he added.
The consumer price index rose last month by 0.1 percent, in line with economists' forecasts. But core inflation, which strips out more volatile food and energy prices, rose a modest 0.1 percent, below forecasts of a 0.2 percent increase.
The dollar's reaction has been muted, however, largely because the numbers are not enough to alter market expectations of future Fed policy. The euro was last at $1.2135.
Rises in US interest rates would tend to draw further demand for the dollar and dull the allure of gold as a hedge against dollar weakness.
Dealers said that key support at $400 an ounce was safe for now, with physical demand at the lower levels from the Middle East and Asia helping to prop up prices.
HSBC analyst Alan Williamson said in a daily report that gold had performed impressively - holding above $400 amid a strengthening dollar.
"Good levels of macro fund buying helped to support the market, with the funds attracted by a number of gold market specific factors," he said, referring to news from the Bank of Italy earlier this week saying it had no plans to sell gold under the European Central Bank Gold Agreement.
Ongoing speculation as to when the World Gold Council would announce the launch of its New York listed exchange traded fund had also helped to support prices, he said.
Silver was steady at $6.25/6.28 from $6.24/6.27 previously.
Platinum eased to $836.00/841.00 from $843.00/848.00 in New York, while palladium was quoted at $206.00/211.00 compared with $206.00/212.00.