(Reuters) - Gold prices dipped slightly on Wednesday, receding from a two-week high hit in the previous session, as the dollar reclaimed some ground but uncertainty over the trajectory of inflation supported the safe-haven bullion's outlook.
Spot gold eased 0.2% to $1,862.65 per ounce, as of 0439 GMT, after rising to its highest since May 9 of $1,869.49 on Tuesday. U.S. gold futures dipped 0.2% to $1,861.50.
Gold prices are set to snap a five-session winning streak.
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The dollar index firmed after hitting its lowest level in a month in the previous session, making greenback-priced bullion more expensive for buyers holding other currencies.
"Investors are struggling with how to assess the landing path of inflation now that peak inflation is behind us. The question for the market is how long it will take to normalize, and that uncertainly is helping gold," said Stephen Innes, managing partner at SPI Asset Management.
As the Federal Reserve amps up its fight against 40-year-high inflation with what is expected to be a string of big interest-rate increases, a U.S. central banker injected a note of caution, warning headlong rate hikes could create "significant economic dislocation."
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While gold is often seen as a hedge against inflation, higher short-term U.S. interest rates raise the opportunity cost of holding non-yielding bullion.
"Gold investors notice the softer change in the Fed language, and dips to $1,850.00 are met with solid support," Innes said.
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Benchmark 10-year U.S. Treasury yields firmed after a drop in the previous session to a one-month low, pressuring demand for zero-yield bullion.
Spot gold may stabilise around a support at $1,856 per ounce and retest a resistance at $1,867, according to Reuters' technical analyst Wang Tao.
Spot silver dipped 0.2% to $22.04 per ounce, and platinum eased 0.1% to $952.97, while palladium rose 0.4% to $2,014.07.