Gold dips on firmer dollar; US inflation data, Fed policy eyed

June 12 (Reuters) –Gold prices edged lower on Wednesday, weighed down by a stronger dollar, as investors awaited key U.S. inflation data and the Federal Reserve’s updated interest rate projections due later in the day.

FUNDAMENTALS

* Spot gold XAU= was down 0.2% at $2,311.80 per ounce, as of 0128 GMT. U.S. gold futures GCcv1 rose 0.1% to $2,328.80.

* The dollar =USD was up 0.1%, making the greenback-priced bullion less attractive for other currency holders, while the benchmark U.S. 10-year bond yield US10YT=RR also rose. USD/US/.

* The May consumer price index (CPI) inflation report, due at 1230 GMT, will be the next major data point to drive Fed expectations.

* Fed policymakers will update their economic and interest rate projections when they conclude their two-day meeting later in the day.

* Updated economic projections from Fed officials this week are expected to show fewer interest rate cuts than policymakers anticipated three months ago.

* Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

* Demand for gold in Asia is surging despite prices hovering near the record highs it hit in May, industry officials say, as buyers snap up the metal to hedge against geopolitical and economic uncertainty.

* Gold producer Polymetal International POLY.MM plans to double output by 2029 through acquisitions in Central Asia and will halt dividends while pursuing that goal, it said on Tuesday in a strategy shift since the sale of its Russian assets.

* Spot silver XAG= rose 0.2% to $29.33 per ounce, platinum XPT= was up 0.8% at $959.10 and palladium XPD= gained 1% to $892.45.

DATA/EVENTS (GMT)

0130 China PPI, CPI YY May

0600 Germany HICP Final YY May

0600 UK GDP Est 3M/3M April

0600 UK GDP Estimate MM, YY April

0600 UK Services MM, YY April

0600 UK Manufacturing Output MM April

1230 US Core CPI MM, SA; YY, NSA May

1230 US CPI MM, SA; YY, NSA May

1230 US CPI Wage Earner May

1800 US Federal Open Market Committee announces its decision on interest rates followed by statement

Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Eileen Soreng