Gold subdued as easing inflation fears boost risk sentiment

GOLD - JAKARTA. Gold prices edged lower on Tuesday as risk appetite improved after U.S. Federal Reserve officials calmed investor concerns over inflation, although a subdued dollar and lower bond yields limited the metal's losses.

Spot gold was down 0.1% to $1,878.90 per ounce by 0503 GMT. U.S. gold futures fell 0.2% to $1,880.10.

"The sentiment pendulum swung back to the bullish side overnight, after a procession of Federal Reserve officials talked down inflation risks. That led to a broad-based recovery in equity markets and has seen gold's momentum temporarily halted," OANDA senior market analyst Jeffrey Halley said.

"Gold's critical support level lies around $1,845 an ounce, its 200-day moving average. As long as it holds above there, the uptrend remains intact."

St. Louis Fed President James Bullard said he expects the inflation rate to be above 2% both this year and the next, but comments from several Fed officials, including Bullard, supported the view that policy will remain on hold for some time.

Asian shares climbed in early trade, tracking a Wall Street rally overnight.

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Meanwhile, bitcoin jumped more than 10% during a surge in cryptocurrencies on Monday, regaining some ground lost due to a sell-off over the weekend.

Offering some respite to gold, the dollar was languishing near four-month lows against major currencies, while U.S. Treasury long-dated yields fell to two-week lows.

Lower bond yields reduce the opportunity cost of holding non-interest bearing gold.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.3% to 1046.12 tonnes on Monday.

Spot gold may fall to $1,859 per ounce, as it has left a triangle, according to Reuters technical analyst Wang Tao.

Elsewhere, palladium rose 0.8% to $2,749.67 per ounce, after falling to a one-month low on Monday.

Silver fell 0.7% to $27.62, while platinum was steady at $1,174.29.

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