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Gold slides to two-week low after US inflation data

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Gold fell to a two-week low on Friday after data showing faster-than-expected growth in U.S. consumer prices last month helped support the case for the Federal Reserve to raise interest rates later this year and the dollar jumped.

Inflation is a key factor the U.S. central bank considers when deciding monetary policy.

While the prospect of a hike at the Fed's policy meeting next week remains remote, a Reuters poll of 100 economists indicated a 70 percent chance of a December rise.

The million-dollar bet against gold

Spot gold slid to its lowest since Sept. 1 in after the data at $1,306.26 an ounce, and was down 0.22 percent at $1,310.86. U.S. gold futures for December delivery settled down 0.6 percent at $1,310.20.

The precious metal is also on track for its first weekly loss in three weeks, down 1.5 percent.

"The U.S. CPI data was positive for the dollar and this has pushed the gold price lower," ThinkMarkets analyst Naeem Aslam said.

"We are trading close enough to a technical support level of $1,300, and if we break this level, it will be a bearish signal for the precious metal."

Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

The dollar gained 0.8 percent against a basket of major currencies.

"Dollar strength is the headwind," said Rob Haworth, senior investment strategist for U.S. Bank Wealth management in Seattle.

"Today you've got enough in the inflation data to increase odds of a Fed rate increase."

The U.S. and Japanese central banks hold monetary policy meetings on Sept. 20-21. The Fed is scheduled to release a statement at 2 p.m. EDT on Wednesday.

Investment appetite was soft, with holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares, falling 3.3 tonnes on Thursday.

Demand for gold in India remained lackluster this week as higher prices hampered consumer purchases, though discounts narrowed due to a correction in the spot rate.

Platinum fell by as much as 2.5 percent to a 2-1/2-month low at $1,005 an ounce and the white metal, used in jewelry and autocatalysts, is set to fall for a seventh straight week for the first time since 2013. It was last down 1.5 percent at $1,015.60.

Palladium was up 2.6 percent at $671.50 an ounce while silver was down 0.7 percent at $18.80.