Gold price retreats as yields, dollar gain post U.S. inflation data

New York (May 12) - Gold prices fell nearly 1% in choppy trading on Wednesday, en route to snap a five-session-long winning streak, after April’s jump in U.S. consumer prices buoyed the dollar and U.S. Treasury yields, reducing appetite for non-yielding bullion.

Spot gold fell 0.9% to $1,820.31 per ounce by 12:45 p.m. EDT (1645 GMT).

U.S. gold futures shed 0.8% to $1,820.70 per ounce.

“Gold has had a turbulent session so far gapping to lows on the shockingly high core CPI print, but then reversing to print new highs on the day behind inflation fear-fueled buying before slipping back as USD rallied behind higher yields,” said Tai Wong, head of metals derivatives trading at BMO.

He said the short-term range was likely to be $1,820-50 within the larger $1,800-1880 span.

Benchmark U.S. 10-year Treasury yields jumped on the stronger consumer prices reading.

While gold is also viewed as a hedge against higher inflation that could follow stimulus measures, higher Treasury yields have weighed on gold, which is down over 3% for the year so far.

The dollar index was up 0.7%, making gold expensive for holders of other currencies, propped up by market bets for higher interest rates to rein in inflation. But the U.S. Federal Reserve has repeatedly said it views any inflation to be transitory in nature.

“What you’re going to see is that the market is going to slowly transition to viewing gold as an inflation hedge.”

Among other precious metals, palladium fell 2.6% to $2,861.64 per ounce, while platinum dipped 1.5% to $1,216.79.

Silver dropped 1.7% to $27.16 per ounce.

Reuters