Gold flat as weaker yields, Ukraine worries counter firmer dollar

[BENGALURU] Gold prices were flat on Wednesday (Apr 13), after gaining as much as 1 per cent in the last session, as Treasury yields eased after US inflation data and concerns over Ukraine conflict supported safe-haven bids, while a firm dollar capped bullion's gains.

Spot gold was little changed at US$1,964.70 per ounce by 1.36 am GMT, after hitting a near 1-month peak of US$1,978.21 on Tuesday. US gold futures were down 0.4 per cent at US$1,968.80.

US Treasury yields moved lower on Tuesday, with the benchmark 10-year Treasury yield on track for its first decline in 8 sessions after a reading on inflation showed an acceleration in March, but sparked hope higher prices may have peaked.

US monthly consumer prices increased by the most in 16-1/2 years in March as Russia's war against Ukraine boosted the cost of gasoline to record highs, cementing the case for a 50 basis point interest rate hike from the Federal Reserve next month.

While gold is considered a hedge against inflation, higher US interest rates and yields increase the opportunity cost of holding bullion.

Ukraine told Russia to release prisoners of war if it wants the Kremlin's most high-profile ally in the country freed, as the United States is expected to send more weapons after Russia's strongest signal yet the war will grind on.

Limiting gold's gains, the US dollar index hovered near May 2020 highs after digesting slightly softer-than-expected US inflation data, making gold less attractive for other currency holders.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.2 per cent to 1,093.10 tonnes on Tuesday.

Spot silver was flat at US$25.36 per ounce, platinum was up 0.3 per cent to US$968.17 and palladium rose 1.1 per cent at US$2,350.68. REUTERS