(Bloomberg) -- Gold rallied, bolstered by lower US Treasury yields as investors sought safety in bonds following an equity selloff.
Bullion rose as much as 1.4% to trade above $4,150 an ounce, recouping nearly all of the previous session’s losses, while silver also gained. Treasury yields, which spiked Wednesday on data showing US consumer prices rose the most since April, largely reversed the move Thursday as a tech-driven stocks rout spurred haven demand.
Gold’s rise was supported by bond yields “on a rollercoaster,” reversing the earlier surge entirely, said Christopher Wong, a strategist from Oversea-Chinese Banking Corp.
Still, headwinds remain in play for the precious metal. Traders increased bets on Wednesday that the hotter-than-expected inflation data may push the Federal Reserve to raise interest rates again later this month. Higher borrowing costs are bearish for gold, which doesn’t yield interest.
Gold has dropped by more than a fifth since the start of the US-Iran war in late February, which roiled energy supplies, triggering global inflation and monetary tightening. Wednesday’s increase in headline CPI was driven in large part by surging fuel costs, while underlying price pressures also rose.