Gold inches higher on softer U.S. dollar, bond yields

Gold prices edged up on Thursday, as the dollar eased and U.S. bond yields retreated from a three-week high, lifting bullion’s appeal.

Spot gold rose 0.1% to $1,869.45 per ounce by 0046 GMT, after hitting a fresh over five-month peak on Wednesday. U.S. gold futures gained 0.1% to $1,871.50.

The dollar fell 0.1%, pulling away from a 16-month peak scaled on Wednesday. A weaker dollar reduces bullion’s cost to buyers holding other currencies.

Benchmark U.S. 10-year Treasury yields were modestly up on Thursday but retreated from a three-week high hit in the previous session, lowering non-yielding gold’s opportunity cost.

Chicago Federal Reserve President Charles Evans on Wednesday reiterated that it will take until the middle of next year to complete the Fed’s wind-down of its bond-buying program even as the central bank checks to see if high inflation recedes as he expects.

British inflation has hit a 10-year high as household energy bills rocket, bolstering expectations the Bank of England will raise interest rates in December.

The European Central Bank must be ready to rein in inflation in the euro zone if it proves more durable than forecast, ECB board member Isabel Schnabel said.

A hike in rates should reduce bullion’s appeal as higher interest rates raises the non-interest bearing metal’s opportunity cost.

Indicative of sentiment, holdings in the SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, rose about 0.1% to 976.87 tons on Wednesday.

Spot silver rose 0.2% to $25.11 per ounce.

Global silver demand will rise to 1.029 billion ounces this year, exceeding a billion ounces for the first time since 2015, the Silver Institute said in a report.

Platinum gained 0.3% to $1,059.98 and palladium rose 0.3% to $2,193.69.