Gold has risen as investors await the US Federal Reserve's quarterly inflation report on Thursday, which may provide clues on their monetary policy path.
On Wednesday, the 10-year Treasury yield fell for the first time in a month under 1.5%, helped by a long auction, while the rate on the U.S. Treasury has dropped to a level previously unseen since early March. This suggests that it is likely that investors are gaining acceptance from Fed's assurances that elevated inflation was temporarily.
Trades are also awaiting the decision of the European Central Bank on Thursday, with policy makers considering all the evidence they need to keep in place their anti-loose monetary stimulus, partly due to their opposite numbers at the Fed.
Bullion has been treading the waters this week with investors speculating on inflation and focusing on the possibility that the Fed will start discussions on demonetization of asset purchases by the Fed. The U.S. Consumer Price Index reports will be one of the last economic indicators before the Fed's next policy meeting June 15 -- 16.
The inflation data may be more important than usual, and gold influenced by it more than usual, because of the Fed blackout ahead of the June FOMC meeting, said James Steel, chief precious metals analyst at HSBC Securities Inc. A higher reading could cause a spike in yields and weigh on gold, especially if it supports the US dollar.
Spot gold was little changed on Wednesday at $1,888. 54 an ounce in Singapore, after dropping 0.2% on October 5. Prices climbed to $1,916. 64 last week -- the highest intraday level since Jan 8. Platinum also ticked higher, while silver and Palladium both remained. The Bloomberg Dollar Spot Index flats out.
From the coronavirus front, the Group of Seven leaders are set to deliver at least 1 billion extra doses of vaccines over the next year in order to help cover 80% of the global adult population, according to a draft communique provided by Bloomberg News.
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