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Gold turned lower as the dollar strengthened, and investors await Thursday’s U.S. inflation report that may provide clues on the Federal Reserve’s monetary policy path.

Firm real yields and a stronger greenback saw gold weaken in Europe trading. The metal has largely treaded water this week as easing inflation expectations have been met by lower bond yields, with the 10-year Treasury falling below 1.5% for the first time in a month on Wednesday, helped by a strong auction.

Thursday’s U.S. Consumer Price Index report will be one of the last major economic indicators before the Fed’s next policy meeting, and may influence the debate on whether the central bank needs to taper monetary stimulus to counter price pressures. So far Fed officials have been almost unanimous in saying inflation will be transitory, though persistently high CPI prints may give them cause for concern.

“The inflation data may be more important, and gold influenced by it more than usual, because of the Fed blackout ahead of the June FOMC meeting,” said James Steel, chief precious metals analyst at HSBC Securities (USA) Inc. “A higher reading may trigger a rise in yields and weigh on gold, especially if it supports the U.S. dollar.”

Traders are also awaiting the European Central Bank decision Thursday, with policy makers having all the evidence they need to keep in place their ultra-loose monetary stimulus, thanks in part to their opposite numbers at the Fed.

Spot gold slipped 0.4% to $1,880.36 an ounce at 9:34 a.m. in London, after dropping 0.2% on Wednesday. Prices climbed to $1,916.64 last week, the highest intraday level since Jan. 8. Silver, platinum and palladium all fell. The Bloomberg Dollar Spot Index strengthened 0.1%.

On the coronavirus front, the Group of Seven leaders is set to vow to deliver at least 1 billion extra vaccine doses over the next year to help cover 80% of the world’s adult population, according to a draft communique seen by Bloomberg News.

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