Gold rises as the dollar declines and Treasury yields fall

Gold prices rose on Thursday against the backdrop of a decline in the dollar and a decline in US 10-year Treasury bond yields, but remained near their lowest levels in five weeks as investor optimism about cutting interest rates faded after tough comments from a Federal Reserve official and strong data.

By 0121 GMT, the price of gold in spot transactions rose 0.2 percent to $2,010.59 per ounce, a day after it fell to $2,001.72, its lowest level since December 13.

US gold futures also increased 0.3 percent to $2,012.40.

The dollar fell 0.2 percent, making gold priced in the US currency less expensive for holders of other currencies. Benchmark 10-year US Treasury bond yields also fell.

Retail sales in the United States rose more than expected last month, making the economy enter the new year on solid ground.

Atlanta Fed President Raphael Bostic is expected to speak at two separate events later Thursday.

Bostic said inflation could “swing” if policymakers rush to cut interest rates, warning that cutting inflation toward the central bank’s 2 percent target is likely to slow in the coming months, the Financial Times reported on Sunday.

Lowering interest rates reduces the opportunity cost of holding bullion.

As for other precious metals, silver rose in spot transactions 0.4 percent to $22.61 per ounce. Platinum increased 0.2 percent to $885.38, and palladium rose 1.2 percent to $926.54.