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Gold drops as U.S. consumer prices raise inflation fears


The U.S. CPI for April climbed 0.9% month-on-month, rising by the most in nearly 12 years

Gold dropped on Thursday morning in Asia over higher-than-expected U.S. consumer prices for April, raising fears about higher inflation.

Gold futures fell 0.34% to $1,816.65 by 3:42 AM GMT.

The benchmark U.S. 10-year Treasury yield jumped to its highest level in more than a month, after an auction of 10-year notes saw strong demand.

The U.S. core consumer price index (CPI) for April climbed 0.9% month-on-month, rising by the most in nearly 12 years.

Investors are worried that the signs of a long period of higher inflation will prompt the U.S. Federal Reserve to hike interest rates.

Fed vice chairman Richard Clarida, however, said on Wednesday that the rise in inflation was likely to be temporary and the central bank won’t consider a slowdown of its stimulus measure until the economy is recovered, which would take some time.

The economy remains a long way from our goals, and it is likely to take some time for substantial further progress to be achieved, Clarida added.

Investors now await April’s producer price index that is due later in the day.

On the stimulus front, President Joe Biden said after meeting with Republican leaders on Wednesday, that he is willing to compromise on his proposed trillions of dollars in infrastructure spending. However, he added that he would move forward with the plan without Republican support if necessary.

In the U.K., the RICS House Price Balance for April added 75%, reaching its highest level in four decades as buyers sought to take advantage from an extended tax break.

In precious metals, palladium climbed 1.7% to $2,903.68 per ounce, silver added 0.5%, and platinum gained 0.4%.

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