Gold slips from record levels after hot US inflation data

By Ashitha Shivaprasad

(Reuters) - Gold prices slipped from record-high levels on Wednesday as the U.S. dollar and Treasury yields firmed after a stronger-than-expected inflation print softened expectations of an early U.S. rate cut.

Spot gold fell 0.7% to $2,335.99 per ounce, as of 2:25 p.m. ET (1825 GMT).

U.S. gold futures settled 0.6% lower at $2,348.4.

The U.S. dollar index rose 1% and U.S. Treasury yields spiked after the data, making non-yielding bullion less attractive. [USD/] [US/]

A Labor Department report showed the Consumer Price Index(CPI) rose 0.4% on a monthly basis in March, compared with the 0.3% increase expected by economists polled by Reuters.

"Strong employment and elevated CPI are interfering with the Fed's rate-cut plans but gold, like inflation, remains cheeky," said Tai Wong, a New York-based independent metals trader.

Federal Reserve officials worried that progress on inflation might have stalled, making a longer period of tight monetary policy necessary, according to the minutes of the U.S. central bank's March 19-20 meeting.

"The minutes seem to suggest that the entire committee would be ready to reduce rates if the economy evolved as expected. Except inflation is moving as expected," Wong added.

Despite being known as an inflation hedge, bullion's appeal tends to fade in an elevated interest rate environment.

Bullion prices hit a record high of $2,365.09 on Tuesday.

"Escalating geopolitical risks significantly bolster gold as hot and cold conflicts, and a record number of elections this year, keep the risk thermometer high," HSBC said in a note, adding that it expects to see a wide trading range of $1,975-$2,500 for gold prices in 2024.

"Gold demand has been very strong this year buoyed by central bank buying, particularly non-western banks have been buying gold to diversify their foreign exchange reserves away from the U.S. dollar and a volatile Chinese currency," said Will Rhind, CEO of GraniteShares.

Spot silver fell 0.4% to $28.04 per ounce, after hitting a near three-year high on Tuesday.

Platinum edged 1.5% lower to $964.35 and palladium fell 4.1% to $1,047.92.

(Reporting by Ashitha Shivaprasad and Anjana Anil in Bengaluru; Editing by Shailesh Kuber and Alan Barona)