FUNDAMENTALS
* Spot gold fell 0.2% to $1,788.07 per ounce, as of 0123 GMT, after hitting its highest since July 5 at $1,807.79 on Wednesday.
* U.S. gold futures dipped 0.5% to $1,805.10.
* U.S. consumer prices did not rise in July due to a sharp drop in the cost of gasoline, delivering the first notable sign of relief for Americans who have watched inflation climb over the past two years.
* However, Minneapolis Fed Bank President Neel Kashkari said that he continues to believe that the U.S. central bank will need to raise its policy rate to 3.9% by year-end and to 4.4% by the end of 2023 to fight inflation.
* Chicago Fed President Charles Evans remained more hawkish than financial markets, expecting that U.S. rates will top out at 4% next year.
* Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
* The dollar index regained some footing to trade up 0.1% at 105.280 after falling to its lowest since June 29 at 104.630 on Wednesday. [USD/]
* Benchmark U.S. 10-year Treasury yields also rebounded to 2.7860%, increasing the opportunity cost of holding non-interest bearing gold. [US/]
* SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.17% to 997.42 tonnes on Wednesday from 999.16 tonnes on Tuesday. [GOL/ETF]
* Spot silver eased 0.2% to $20.53 per ounce, platinum rose 0.2% to $943.31, and palladium gained 0.2% to $2,244.33.
DATA/EVENTS (GMT, July)
1230 US Initial Jobless Clm Weekly
1230 US PPI Machine Manufacturing July
(Reporting by Brijesh Patel in Bengaluru; Editing by Rashmi Aich)
