Precious metals gained some ground on Wednesday on the back of dollar weakness and a crude oil rally, and as a fasterthan- expected pace in U. S. inflation boosted bullion's appeal as an investment hedge against a potential upward spiral in prices.

Gold futures on MCX rose by 0.78 percent only, compared with the rise of 1.79 percent on COMEX, as appreciation in rupee against the dollar capped the upside in gold prices on MCX. Silver futures also rose, gaining 1.51 and 3.23 percent on MCX and COMEX respectively.

CME Group Inc said it will offer clearing services for over-the-counter (OTC) London gold forwards, as the largest U. S. commodities exchange aimed at expanding its gold trading operation. The company said the contracts will be made available for clearing on COMEX through the CME ClearPort platform.

The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings were unchanged at 1,094.54 tonnes as of July 15, after falling
1.4 percent the day before, its largest drop in three months.

Italy proposed to sharply reduce a tax on notional gains in the value of gold r reserves on Wednesday after the European Central Bank said the tax risked breaching the Bank of Italy's independence.

U. S. Consumer Price Index for the month of June rose by 0.7 percent, better-than-expected figure of 0.6 percent. It had risen by 0.1 percent in the month of May.

Gold and silver shot up in the last trading session due to inflationary concerns and weaker dollar. We expect uptrend to continue in precious metals. Silver is likely to outperform gold in near term. The bias for the day is on upside.