Gold futures rose on Wednesday morning as the dollar and yields fell after a report showed U.S. inflation eased last month.

Gold for August delivery was last seen up $16.40 at $3,359.80 an ounce.

The U.S. Bureau of Labor Statistics reported the Consumer Price Index rose 0.1% in May from April, down from a 0.2% pace in the previous month and below the consensus estimate for a 0.2% increase, according to Marketwatch. Core CPI, which excludes volatile food and energy costs, rose 0.1% on a month-over-month basis, down from 0.2% in April, while the consensus estimate was for a 0.3% increase.

Gold's gains came despite easing international trade tensions as the United States and China agreed to a framework deal following two days of talks in London that will see the two countries ease export controls on strategic goods including Chinese rare earths and U.S. semiconductors.

"Gold prices traded higher despite the US and China agreeing to ease trade tensions, with the focus on US inflation data due later today, investor appetite for US 10-year bonds auctioned today, continued central bank demand and continued demand for investment metals," Saxo Bank noted.

The dollar weakened following the inflation report. The ICE dollar index was last seen down 0.37 points at 98.73. US Treasury yields fell sharply, with the two-year US Treasury last seen paying 3.96%, down 7.3 basis points, while the 10-year yield fell 4.4 points to 4.436%. (alg)

Source: MT Newswires