Gold Prices Fall with Treasury Yields Up as Pace of U.S. Inflation Hits 13Year High

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Gold prices declined on Thursday, pressured as Treasury yields edged higher in the wake of government data showing that the pace of U.S. inflation climbed to a 13year high in May.

The U.S. consumer price index jumped 0.6 last month, marking the fourth large gain in a row. The rate of inflation over the past year escalated to 5 from 4.2 in the prior month. That put it at the highest level since 2008.

The Federal Reserve is still of the opinion that current inflation is temporary, due to COVIDcaused supply issues, and a rebound of the economy after lockdowns last year, Jason Teed,  coportfolio manager of the Gold Bullion Strategy Fund, told MarketWatch after the CPI data. So far, the market appears to agree.

Should inflation continue beyond whats expected, gold may continue to increase in price, but if we see inflation begin to ameliorate, the metal may let go of some of the gains weve seen so far this year, he said.   

August gold was down 80 cents or 0.04, at 1,894.70 an ounce, following a nearly 0.1 rise on Wednesday.

Gold prices traded mostly lower after the inflation data, but have managed to pare their losses from the days low at 1,871.80.

The CPI report falls into the camp of those who think inflation could get too hot in the coming months, said Jim Wyckoff, senior analyst at Kitco.com, in a market update.

On a nearterm basis, the gold and silver traders are placing more emphasis on the uptick in bond yields after the CPI report, and less on the bullish…

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