Gold reclaims US$1,900 mark as dollar, yields slip after US data

[BENGALURU] Gold prices edged above US$1,900 per ounce level on Friday, supported by a pullback in the dollar and lower bond yields, after data showing a rise in US inflation was viewed inadequate to alter the Federal Reserve's easy monetary policy.

Spot gold was up 0.1 per cent at US$1,900.51 per ounce, as of 3.13am GMT. Prices have risen more than 0.5 per cent this week.

US gold futures rose 0.3 per cent to US$1,902.90 per ounce.

Data showed US consumer prices rose solidly in May, leading to the biggest annual increase in nearly 13 years, while weekly jobless claims dropped to their lowest level in nearly 15 months last week.

"The rise in US inflation failed to spark a tapering sell-off. That saw bond yields edge lower helping gold to bounce back," said Jeffrey Halley, senior market analyst at Oanda.

"The FOMC (Federal Open Market Committee) next week is now likely to be a non-event, and barring a sharp rise in the dollar. Gold looks set to test resistance at US$1,920 early next week, as the asset price appreciation trade gains new momentum."

The benchmark US Treasury yields dropped to a three-month low, reducing the opportunity cost of holding non-interest bearing bullion.

The dollar index, meanwhile, fell 0.1 per cent after hitting a near one-week high in the previous session.

On Thursday, the European Central Bank kept its monetary policy unchanged and pledged a steady flow of stimulus over the summer.

Focus now shifts to Fed's June 15-16 policy meeting.

The Fed is likely to announce in August or September a strategy for reducing its massive bond-buying programme, but would not start cutting monthly purchases until early next year, according to a Reuters poll.

Silver rose 0.5 per cent to US$28.10 per ounce, while platinum was steady at US$1,151.47.

Palladium eased 0.3 per cent to US$2,768.65 and was on track for a weekly decline.

REUTERS