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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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(Updates prices)

* 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 slipped amid expectations that the U.S. Federal Reserve will keep its monetary policy accommodative.

Spot gold rose 0.8% to $1,896.74 per ounce by 1:42 p.m. EDT (1742 GMT), having earlier hit its highest since Jan. 8 at $1,898.40. U.S. gold futures settled up 0.7% at $1,898.

Data showed a U.S. consumer confidence index for May eased to 117.2.

“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.

Gold is often considered a hedge against inflation.

Making bullion more affordable, the dollar index was pinned near 4-1/2 month lows, while U.S. yields touched a 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 the current easy monetary policy will remain in place.

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.”

Elsewhere, palladium rose 1.7% to $2,774.22, platinum was up 1.8% at $1,195.54, and silver was 0.5% higher at $27.93. (Reporting by Sumita Layek in Bengaluru; Editing by Steve Orlofsky, Chris Reese and Nick Zieminski)

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