Gold gains as dollar, Treasury yields weaken after US inflation data

GOLD gained on Thursday (May 12) as the dollar and Treasury yields slipped after US consumer price data suggested inflation might have peaked in April, allaying some concerns of more aggressive Fed rate hikes.

A weaker dollar makes gold attractive for overseas buyers, while lower Treasury yields reduce the opportunity cost of holding zero-yield bullion.

Spot gold was up 0.2 per cent at US$1,855.11 per ounce, as of 1.03 am GMT, having risen as much as 1.1 per cent in the previous session.

US gold futures rose 0.2 per cent to US$1,856.90.

The dollar fell, lifting demand for greenback-priced gold after economic data showed inflation remained high but was unlikely to lead the US central bank to shift to a more aggressive path of monetary policy.

The consumer price index (CPI) rose 0.3 per cent last month, the smallest gain since August, the Labour Department said on Wednesday, versus the 1.2 per cent month-to-month surge in the CPI in March, the largest advance since September 2005.

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Benchmark US 10-year Treasury yields were down after the data failed to ease concerns that the Federal Reserve's agenda to cool rising prices may induce a recession.

The Fed raised its benchmark overnight interest rate by half a percentage point last week, the biggest hike in 22 years, as it moves to unwind ultra-easy pandemic-era monetary policy and attempts to combat soaring inflation.

Spot silver was up 0.1 per cent to US$21.57 per ounce, while platinum dipped 0.2 per cent to US$990.64, and palladium fell 0.7 per cent to US$2,021.16. REUTERS