Gold advanced, holding near the highest price in more than four months as bond yields gave up early gains and the dollar extended its slump.
The yield on 10-year Treasuries declined, and the dollar headed for its fifth loss in six sessions. Falling rates boosts demand for non-interest bearing bullion, while a soft dollar makes the precious metal for attractive for investors holding other currencies.

Gold was on its way to a sixth straight gain, with buyers shrugging off concerns over Federal Reserve minutes Wednesday that showed some policy makers open to talking about tapering bond purchases. Rising inflation expectations and the Fed’s pledge to keep rates low for longer have revived interest in gold, highlighted by rebounding holdings in exchange-traded funds backed by the metal.

“The inflation issue is top of mind for gold and silver, given both metals’ reputation as inflation hedges, with the debate being primarily about the question of whether rising prices are transitory or permanent,” Carsten Menke, an analyst at Julius Baer Group Ltd., wrote in a note. “We firmly believe they will be transitory.”

Spot gold rose 0.3 per cent to US$1,874.70 an ounce by 3:04 p.m. in New York. Prices reached US$1,890.13 on Wednesday, the highest since early January, but pared gains after the release of the Fed minutes. Futures for June delivery on the Comex rose less than 0.1 per cent to settle at US$1,881.90.

Silver was steady and platinum advanced on Thursday, while palladium fell. The Bloomberg Dollar Spot Index was down 0.4 per cent.

A U.S. report showed applications for state unemployment insurance in the U.S. fell last week to a fresh pandemic low, rekindling optimism in the economic recovery.

”After the claims data, we saw gold pushing back above US$1,880 behind rallying stocks, lower yields and a softer dollar,” said Tai Wong, head of metals derivatives at BMO Capital Markets.

The extreme price swings in cryptocurrencies on Wednesday may also have helped support bullion. Bitcoin has been seen by some investors and analysts as a replacement for gold, particularly during the metal’s rocky start to the year.

“It appears as though the recent weakness in Bitcoin is seeing some investors shifting to gold,” said Warren Patterson, head of commodities strategy at ING Groep NV in Singapore.