Gold Dips Pressured By Stronger Dollar

Gold prices eased on Tuesday as the dollar strengthened ahead of Thursday's all-important inflation report. A stronger dollar makes gold expensive for other currency holders.

Spot gold dropped 0.3 percent to $1,892.79 per ounce, while U.S. gold futures were down 0.2 percent at $1,896.55.

The U.S. dollar appreciated against its major counterparts and bond yields were largely flat, as investors await U.S. inflation data due later this week for more clues on the Fed monetary policy outlook.

With price pressures growing, there are fears that the Federal Reserve is heading closer to begin discussions about tapering of the asset purchase program.

Treasury Secretary Janet Yellen on June 5 said inflation could reach as high as 3 percent this year as recovery continues.

"If we ended up with a slightly higher interest-rate environment it would actually be a plus for society's point of view and the Fed's point of view," she said.

Also on investors' radar is the European Central Bank's policy meeting on Thursday, when the central bank will review the pace of emergency bond boys.

Given recent dovish commentary, most analysts expect the central bank to maintain a higher pace of buying in the third quarter.

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