PRECIOUS-Gold inches down as market digests US CPI data

Silver hit record high of $66.88/oz on Wednesday US annual consumer prices increase less than expected in November Palladium touches a near 3-year high (Recasts paragraph 1, adds quotes and updates prices for AMERS market close) By Anmol Choubey Dec 18 (Reuters) - Gold prices edged lower on Thursday as markets digested softer-than-expected U.S. inflation data, reducing the yellow metal’s appeal as an inflation hedge, while support from a higher November unemployment rate limited further losses. Spot gold (XAU=) fell 0.2% to $4,330.39 an ounce as of 02:26 p.m. ET (19:26 GMT). Bullion hit a record high of $4,381.21 on October 20, and was hovering near these levels earlier in the session. U.S. gold futures (GCcv1) settled 0.2% lower at $4,364.5. “Now that inflation is evidently falling faster than expected, this kind of reduces the appeal of buying insurance for inflation. Gold has been a major inflation hedge, so its weakness makes some sense in the aftermath of the CPI report,” said Fawad Razaqzada, market analyst at City Index and FOREX.com. U.S. consumer prices rose 2.7% year-on-year in November, data showed, falling short of the 3.1% increase forecast by economists polled by Reuters. Futures on the federal funds rate factored in a slightly increased chance of the Federal Reserve trimming interest rates at its January meeting, after the data. “It is worth remembering that part of the reasons why gold has been rising so sharply over these years has been due to high levels of inflation eroding the value of fiat currencies,” Razaqzada added. Non-yielding assets like gold thrive in a lower-interest-rate environment, and is a reputed inflation hedge. “The trend is still very much positive in gold and an eventual upside breakout of that trend is anticipated. I’ve got upside objectives at $4,515.63 and $5,000 is still a valid objective as well,” said Peter Grant, vice president and senior metals strategist at Zaner Metals. Spot silver (XAG=) dropped 1.5% to $65.3/oz, retreating from a record high of $66.88 hit in the previous session. Silver has outperformed gold this year, climbing 126% year-to-date on investment demand and concerns over a supply deficit. Platinum (XPT=) rose 1.2% to $1,922.05, a more than 17-year high, while palladium (XPD=) gained 3.7% to a nearly three-year high of $1,708.72. “The wave of price increases for precious metals has now spread from silver to platinum… the platinum price is being buoyed by strong demand from China,” Commerzbank said in a note. Gold-silver and gold-platinum ratios hit multi-year lows Precious metals performance year-to-date