Gold rises as Fed holds ground on rates, firm yields cap gains

Gold edged higher on Thursday, buoyed by hopes that the U.S. Federal reserve may not hike interest rates anytime soon, but a jump in U.S. Treasury yields following a bigger-than-expected rise in April’s U.S. consumer prices capped gains.

FUNDAMENTALS

* Spot gold was up 0.2% at $1,819.71 per ounce by 0116 GMT.

* U.S. gold futures eased 0.2% to $1,819.10.

* U.S. consumer prices increased by the most in nearly 12 years in April, as booming demand amid a reopening economy pushed against supply constraints, which could add fuel to financial market fears of a lengthy period of higher inflation.

* The data has put investors on high alert for more signs of inflationary pressure that could tilt the U.S. Federal Reserve toward raising interest rates.

* However, Fed Vice Chair Richard Clarida said on Wednesday it would be “some time” before the economy is healed enough for the central bank to consider scaling back its support.

* Benchmark U.S. 10-year Treasury yields hit their highest in more than a month. Higher bond yields increase the opportunity cost of holding non-yielding gold. [US/]

* U.S. President Joe Biden said on Wednesday he sees room for a compromise on his proposal for trillions of dollars in infrastructure spending after meeting with Republican leaders, but will move forward without the opposition party if necessary.

* Asian shares faced a third day of losses. [MKTS/GLOB]

* A measure of British house price inflation hit its highest level in four decades in April as buyers raced to take advantage of an extended tax break, a survey showed on Thursday.

* Palladium gained 1.7% to $2,903.68 per ounce.

* Silver rose 0.5% to $27.16 per ounce, while platinum was up 0.4% at $1,214.10.

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