Gold hemmed into tight range as focus turns to Fed moves

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  • European shares hit more than one-week high
  • Dollar hovers close to one-week high
  • FOMC meeting on Dec. 14-15

Dec 7 (Reuters) - Gold traded in a tight range on Tuesday as the focus turned to U.S. consumer prices data later this week that may influence the Federal Reserve's interest-rate hike timeline, with investors seeming to shrug off concerns over the Omicron variant.

Spot gold was up 0.2% to $1,782.30 per ounce by 1239 GMT, stuck in a narrow range. U.S. gold futures were up 0.2% to $1,784.60.

Friday's U.S. Consumer Price Index report could be crucial in gauging the Fed's monetary policy, especially in the run up to the Federal Open Market Committee's (FOMC) next meeting on Dec. 14 and 15.

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"When the central banks started resisting tightening and addressing inflation, that's when we saw gold spike. So the fear of inaction despite high inflation is the only real bullish case for gold right now," said Craig Erlam, a senior market analyst at OANDA.

"We're just seeing this very low, volatile, choppy movement in gold. It seems to be more of a consolidation move right now and there's an eye on this Fed meeting next week seeking more clarity on interest rates at the time of such significant uncertainty around Omicron," Erlam added.

Gold's slight uptick came despite gains in global equities that jumped as Omicron worries waned. read more

"With the much more positive mood in the market, gold prices are likely to remain fairly subdued now ... Unless there is a significant deterioration in risk appetite, don't expect to see gold much above $1,820 in the (near) term," said Michael Hewson, chief market analyst at CMC Markets UK.

The dollar index <.DXY> held close to a one-week high, raising gold's cost for overseas buyers.

Platinum gained 2.4% to $959.92 an ounce, palladium added 1.3% to $1,877.73 and silver rose 0.4% to $22.45 per ounce.

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Reporting by Asha Sistla in Bengaluru; Editing by Kirsten Donovan and Uttaresh.V

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