Gold climbs 1%, near 2-month peak in run-up to US CPI report

Bullion climbed to its highest since June 5 on Tuesday, but retreated after facing resistance at its 100-day moving average near $4,387 an ounce, ending lower for only the second time this month.

"Following weaker U.S. payrolls, the focus is on U.S. inflation," said UBS analyst Giovanni Staunovo.

"A lower print would see the market pricing out further U.S. rate cuts and further support the gold price, but with still-high U.S. gasoline prices, that should cap the upside in the near term, with Fed official eventually retaining a hawkish message."

Traders are now pricing in a 50% chance of a hike in September, down from 60% before the jobs report, according to the CME FedWatch Tool. FEDWATCH

The U.S. consumer price index data due later in the day could alter the trajectory of interest rate expectations.

Fed Bank of Chicago President Austan Goolsbee said he is more concerned about too-high inflation than about any labour market weakness.

Bullion posted its strongest weekly performance since January on Friday, buoyed by weaker-than-expected employment data that led traders to scale back U.S. rate-hike bets.

Lower interest rates support gold as bullion does not yield any interest.

Gold prices rose more than 1% on Wednesday, supported by easing expectations for a Federal Reserve rate hike next month as market participants awaited pivotal U.S. inflation data that is likely to shed light on the central bank's future policy path.

Spot gold XAU= was up 1.1% at $4,414.63 per ounce by 0918 GMT. U.S. gold futures GCcv1 firmed 0.7% to $4,470.9.