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* Dollar slides to 4-1/2 month low
* Benchmark U.S. yields hit two-week low
* Gold has a good chance of getting to $2,000 in H2 -analyst
May 25 (Reuters) - Gold prices scaled a more than four-month peak on Tuesday, as the dollar and U.S. Treasury yields slumped after data showed consumer confidence dropped slightly in the United States.
Spot gold rose 0.5% to $1,890.45 per ounce by 10:35 a.m. EDT (1435 GMT), having earlier hit its highest since Jan. 8 at $1,895.56. U.S. gold futures gained 0.5% to $1,893.
Data showed U.S. Consumer Confidence Index for May eased to 117.2, while U.S. one-year consumer inflation rate expectations rose to 6.5%.
“With the consumer confidence pulling back a bit, we’re getting a knee jerk reaction. Some may be thinking that the Federal Reserve will be more dovish for a longer period of time now,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
“If we get weaker consumer confidence and higher inflation expectations, it could mean the Fed will let inflation run even hotter than what was expected before, meaning any raise in rates would be even farther.”
Gold is often considered a hedge against inflation.
Making bullion more affordable, the dollar index hit 4-1/2 month lows, while benchmark U.S. yields touched an over two-week low, reducing the opportunity cost of holding non-interest paying gold.
Fed policy makers in separate remarks have played down inflation concerns and reiterated that the current easy monetary policy will remain in place.
However, ED&F Man Capital Markets analyst Edward Meir said, “markets are getting a sense that inflation is more deeply embedded than what the Fed is currently expecting ... this is leading to money going into inflation hedges like gold.”
“Gold has a good chance of getting to $2,000 during the second half of this year, but shorter-term, $1,900 looks to be the next logical target.”
Elsewhere, palladium rose 1.3% to $2,763.61, platinum was up 0.8% at $1,183.76, and silver was 0.3% higher at $27.89. (Reporting by Sumita Layek in Bengaluru; Editing by Steve Orlofsky)
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May 25, 2021 at 10:02PM
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PRECIOUS-Gold hits 4-1/2 month peak as dollar, yields drop after U.S. data - Reuters
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