Gold flat as firm dollar, U.S. rate hike dent appeal

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Gold fell on Friday as the dollar held firm against a basket of currencies 

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After data showed U.S. consumer prices rose more than expected in January, denting demand for the metal as an inflation hedge.

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Spot gold was down 0.3 percent at $1,319.81 per ounce by 0050 GMT, having dipped to its lowest since Jan. 23 at $1,316.40 on Thursday. 

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U.S. gold futures for April delivery were down 0.2 percent at $1,320 an ounce.

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"The stronger than expected inflation data has seen real yields in the United States move higher overnight… 

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Denting demand for non-yielding assets such as gold," ANZ analysts said in a note.

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The consumer price index rose 0.5 percent last month, driven by increases in the cost of gasoline and rental accommodation, the Labor Department said on Thursday.

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Inflation has been creeping up on the back of a tightening labor market and as the prospect of higher U.S. interest rates 

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Fiscal stimulus under President Donald Trump's administration boosts the outlook for economic growth.

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Higher interest rates reduce demand for gold because it does not bear interest and costs money to store and insure.

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