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PRECIOUS-Gold gives up early gains as firm bond yields offset weak dollar
Published at 14/04/2021 at 07:03

* U.S. dollar at 3-week low

* U.S. CPI gains by the most in more than 8-1/2 years in March

* Investors eye U.S. retail sales on Thursday

(Updates prices)

By Diptendu Lahiri

April 14 (Reuters) - Gold prices gave up early gains and were flat on Wednesday, as weakness in the U.S. dollar due to higher inflation was countered by some firming in Treasury yields.

Spot gold was flat $1,743.01 per ounce by 0549 GMT, after rising as much as 0.3%. U.S. gold futures fell 0.4% to $1,741.30 per ounce.

"Though the dollar is weaker this morning, but a slight uptick in U.S. Treasury yields is keeping gold's upside movement muted," said Margaret Yang, a strategist at DailyFX.

"The next big thing that investors are looking for is the retail sales data on Thursday and if it beats forecasts, which it is expected to... (It) will put some pressure on gold," she said adding that the fall could be limited since gold has double-bottomed at $1,680.

Consumer prices in the United States soared the most in more than 8-1/2 years in March, setting off what most economists expect to be a fleeting spell of higher inflation, supporting bullion — a traditional inflation hedge.

The U.S. dollar fell to three-week lows, making gold cheaper for holders of other currencies, while a slight rise in Treasury yields increased the opportunity cost of holding the metal that pays no return.

Bullion was also supported by comments from Philadelphia Federal Reserve President Patrick Harker who said the Fed will not withdraw its funding just yet even as the U.S. economy could expand by 5% to 6% this year.

Gold must test the $1,760-mark, a former support turned resistance, in order to attract new bullish-pattern traders and push prices higher, Avtar Sandu, a senior commodities manager at Phillip Futures, said in a note.

Silver rose 0.1% to $25.35 and palladium was down 0.1% to $2,687.63 per ounce. Platinum gained 0.7% to $1,163.73.

(Reporting by Diptendu Lahiri in Bengaluru; Editing by Uttaresh.V and Rashmi Aich)

((Diptendu.Lahiri@thomsonreuters.com; within U.S. +1 651 848 5832; outside U.S. +91 80 6749 3683;; Reuters Messaging: diptendu.lahiri.thomsonreuters.com@reuters.net))