By Seher Dareen
(Reuters) - Gold prices inched up from a two-week low on Wednesday, supported by worries over rising inflation, although a stronger dollar and rising U.S. yields kept gains in check.
Spot gold rose 0.3% to $1,842.83 per ounce by 1516 GMT, earlier hitting its lowest since May 19 at $1,827.80. U.S. gold futures fell 0.1% to $1,846.50.
"The underlying theme of the gold market is still worrisome inflation, which is probably going to keep a floor under the market and prompt a little bit more buying interest," Kitco senior analyst Jim Wycoff said
"We're seeing some short covering in the futures market and little bit of bargain hunting in the cash market after the recent selling pressure."
However, making gold more expensive for holders of other currencies, the dollar index gained 0.3%, while U.S. Treasury yields also rose. [USD/] [US/]
Euro zone inflation data was much higher than expected on Tuesday, increasing pressure on the European Central Bank ahead of its policy meeting next week.
Investors are also looking ahead to U.S. nonfarm payrolls data and May's inflation data for clues into the economy and outlook for the Federal Reserve's policy tightening path.
Markets have priced half-point interest rate rises from the Fed this month and next, although uncertainty clouds about the outlook beyond that.
Bullion is considered a hedge against inflation and a safe haven during times of political and economic uncertainty. However, higher interest rates increase the opportunity cost of holding gold and boosts the dollar.
"As the year unfolds, we expect gold prices to revert to taking their cue primarily from real yields and trend lower, albeit remain elevated compared to historical levels," Standard Chartered said in a note.
Spot silver rose 1.1% to $21.76 per ounce, having hit a two-week low earlier.
Platinum rose 2.6% to $989.34, and rose as much as 4.4% to $1,006.93 earlier. Palladium was up 0.5% to $2,009.93.
(Reporting by Seher Dareen in Bengaluru;Editing by Amy Caren Daniel)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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