Gold prices hit nine-month low on dollar strength; Spot gold reaches $1,726.27 per ounce

Gold prices hovered near a more than nine-month low on Wednesday, with the dollar continuing to hurt bullion demand, while investors awaited monthly US inflation data for cues on the road ahead for the Federal Reserve's monetary policy. 

FUNDAMENTALS

* Spot gold was little changed at $1,726.27 per ounce at 0106 GMT, after dropping to its lowest level since late-September at $1,722.30 earlier. US gold futures dipped 0.2% to $1,721.80. 

* The dollar steadied at 20-year highs, continuing to make greenback-priced gold less attractive for buyers holding other currencies. 

* Benchmark US 10-year Treasury yields rose, decreasing the appeal of non-yielding gold. 

* Economists polled by Reuters expect the US Labor Department's June Consumer Price Index (CPI), due later in the day, to have accelerated on both a monthly and annual basis, by 1.1% and 8.8%, respectively. 

* Barring a major surprise, the CPI data could coalesce investors' expectations for a 75-basis-point interest rate hike by the Fed later this month, as the US central bank seeks to rein in inflation. 

* Although gold is seen as an inflation hedge, higher rates draw investors away from bullion, which bears no interest. 

* SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.17% to 1,021.53 tonnes on Tuesday from 1,023.27 tonnes on Monday.

* Spot silver firmed 0.3% to $18.94 per ounce, platinum rose 2% to $847.27, and palladium gained 0.2% to $2,029.90.