Gold gains despite higher US Treasury yields, weaker dollar lends support

Gold prices firmed on a weaker dollar on Thursday, even as US Treasury yields rose after economic data showed signs of persistent inflation, lowering hopes of the Federal Reserve cutting interest rates anytime soon.

Spot gold rose 0.8% to USD 2,333.79 per ounce by 2:07 p.m. ET (1807 GMT). Prices were down nearly USD 100 from an all-time high of USD 2,431.29 scaled on April 12, fueled by geopolitical turmoil.

US gold futures settled 0.2% higher at USD 2,342.5.

The dollar eased in tight seesaw trade after data showed that US economic growth slowed more than expected in the first quarter, but an increase in inflation suggested the Fed would not cut interest rates before September.

“Gold is trading on the additional data point that shows that the Fed is not in a position to cut rates anytime soon,” said Bob Haberkorn, senior market strategist at RJO Futures.

US Treasury yields hit more than five-month highs after the data was released.

Gold is traditionally known as an inflation hedge, but elevated interest rates reduce the allure of holding non-yielding bullion.

“After a very dramatic move higher in gold over the course of the last several weeks, it is in the midst of a consolidation,” said David Meger, director of metals trading at High Ridge Futures.

“Certainly that could change in the short term if we see an inflationary print that comes out very benign and inflation is much more reduced.”

The March core Personal Consumption Expenditures Price Index (PCE) data is due on Friday.

Meanwhile, top consumer China’s net gold imports via Hong Kong jumped 40% in March from the previous month, data showed.

Spot silver gained 0.7% to USD 27.36 per ounce.

Platinum added 1.5% to USD 915.75, palladium lost 1.7% to USD 983.75.

BHP Group said it will offer Anglo American’s shareholders a premium of 31%, and carve out the London-listed group’s iron ore and platinum assets in South Africa, where the world’s largest listed miner has no activities.

(Reporting by Ashitha Shivaprasad and Anjana Anil in Bengaluru; Editing by Krishna Chandra Eluri and Alan Barona)