Gold, little changed in London, may gain as higher U.S. consumer prices and a declining dollar buoy the appeal of the metal as a hedge against inflation and further weakness in the global economy.

The metal may gain before U.S. reports today that will probably show housing starts fell to a 17-year low last month and manufacturing shrank for an eighth month. Prices paid by consumers in June gained the most since 2005 on higher costs for fuel and food, the U.S. Labor Department said yesterday.

“The elevated credit risk and heightened inflation awareness should ensure good support for gold and silver,” Walter de Wet, head of commodities research at Standard Bank Group Ltd. in Johannesburg, wrote in a report today.

Gold for immediate delivery fell $1.42, or 0.2 percent, to $958.53 an ounce as of 11:54 a.m. in London, after rising as much as 0.7 percent in earlier trading. Futures for August delivery dropped $3.30, or 0.3 percent, to $959.40 an ounce on the Comex division of the New York Mercantile Exchange.

The dollar fell against the euro and neared a two-month low against the yen on speculation credit-market losses in the U.S. will deepen, undermining the case for the Federal Reserve to raise interest rates.

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