Yellow metal dips slightly to Rs 9,785

Standard gold prices in Mumbai closed at Rs 9,785 per 10 gms, a minor fall of Rs 15 over its previous close. At the Multi Commodity Exchange (MCX), spot gold was trading at Rs 9802, down by Rs 60 over the previous day's close.

Gold has gained about Rs 200 this week on account of escalating tensions in West Asia and rising crude prices. On Tuesday, Iran had rejected the United Nations' incentive offer to halt its nuclear programme.

The rally in crude was on account of this and owing to a threat of a potential storm in Gulf of Mexico which might affect the US oilfields gave strength to gold.

"Gold would continue to be on a higher side this week on account of geopolitical factors and the rising crude prices. However, some correction can be expected after the August 8 Federal Reserve meeting," said an analyst with Karvy Commodities.

The price rise earlier this week was owing to speculative buying overseas and the profit booking on Thursday lead to softening of prices, added the analyst. Further, the US job data release showing a rise in unemployment has also brought some pressure on gold.

The release of US Core Personal Consumption Expenditure, which is the Fed's preferred measure of inflation showed that the PCE index rose 0.2 per cent in June, with the yearly growth recording at 2.4 per cent.

This has been the highest rate since 1995 and is widely out of the Fed's preferred range of 2 per cent. At this juncture, the Fed has an equal probability of either increasing or not increasing rates at the next meeting, added the analyst.