Gold subdued on firm yields with US inflation in focus

Gold inched lower on Thursday pressured by elevated USTreasury yields as the focus turned to US inflation data for the Federal Reserve's interest rate hike plan after the European Central Bank signalled a July increase.

TheECBsaid it will end bond buys on July 1 then raise rates by 25 basis points later that month. It will hike again in September and may opt for a bigger move then if the inflation outlook fails to improve.

Spot gold fell 0.3 per centto 1,847.59 dollars per ounce by 1249 GMT, little changed after theECBdecision.

US gold futures shed 0.3 per centto 1,850.00 dollars.

"It seems to be that theECBare willing to raise rates, but not go particularly aggressive and that's the sentiment the (gold) market's taking away", said Nitesh Shah, analyst at WisdomTree.

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"Inflation upside surprises are always a catalyst for gold price moves. But on the flip side, you got the Fed reacting to these numbers,the market right now is expecting back to back 50 bps rate increases that will act as a headwind", Shah added.

The monthly USconsumer price index data on Friday could signal whether the Fed will continue its aggressive policy tightening post July.

The benchmark US10-year Treasury yields held steady near the key 3 per centthreshold, eroding gold's appeal.

Rising interest rates increase the opportunity cost of holding non-yielding bullion, even though the metal is considered a safe haven amid political and economic uncertainties.

"We'll probably have to wait until tomorrow's CPI report before we see a sustainable move in either direction, but we've taken comfort that ETF (exchange-traded fund) flows into gold yesterday were their strongest in a month", City Index senior market analyst Matt Simpson said.

Spot silver dipped 0.5 per centto 21.92 dollars per ounce, while platinum shed 2.1 per cent, to 984.71 dollars. Palladium fell 0.8 per centto 1,927.59 dollars.

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