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PRECIOUS-Gold edges higher after U.S. inflation data

* ECB keeps monetary policy unchanged

* U.S. CPI rises 0.6% in May

* Declining auto output limits PGM demand -analyst (Adds comments, updates prices)

June 10 (Reuters) - Gold prices nudged up on Thursday after data showed U.S. consumer prices increased more than expected last month but eased fears over the Federal Reserve tapering its monetary support.

Spot gold rose 0.3% to $1,893.75 per ounce by 1:43 p.m EDT (1743 GMT), having earlier hit its lowest level since June 4 at $1,869.46.

U.S. gold futures settled at 1,896.40 an ounce.

Data showed U.S. consumer prices increased further in May as continued economic recovery from the pandemic boosted domestic demand. Weekly jobless claims also dropped to their lowest level in nearly 15 months.

“The key takeaway (from the inflation data) is that this market is firmly believing that the U.S. Federal Reserve is not going to change stance anytime soon and the (accommodative policy) playbook for gold remains,” said Edward Moya, senior market analyst at OANDA.

Some pricing pressures remain for gold, but ultimately the belief that “runaway” inflation, which could trigger a Fed policy tightening, is unlikely should keep gold supported, Moya said.

Investors also took stock of the European Central Bank pledge to maintain a steady flow of stimulus over the summer, at its policy meeting.

“We expect gold prices to move higher in coming weeks, and inflation expectations will remain a focal point,” said Suki Cooper, an analyst at Standard Chartered, adding that recent growth in investor appetite has more than offset weak physical gold demand, particularly from India and China.

Among other metals, palladium dropped 0.6% to $2,762.56, while platinum fell 0.4% to $1,145.23.

“Supply chain disruptions in semi-conductors have definitely limited new automobile production and thus demand for platinum and palladium group metals (PGMs)” keeping a lid on their prices, said Jeffrey Christian, managing partner of CPM Group.

Platinum and palladium are used as catalysts in vehicles to reduce emissions.

Silver rose 0.5% to $27.88 per ounce. (Reporting by Nakul Iyer in Bengaluru Editing by Marguerita Choy and Steve Orlofsky)

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