Gold eases after sharp gains as inflation concerns come to the fore

Gold prices edged lower on Thursday, with traders taking profits from gains in the previous session and a rise in oil prices putting the focus on inflation risks.

Spot gold XAU= was down 0.3% at $4,509.91 per ounce by 12:15 p.m. EDT (1615 GMT), retreating from the highest level since June 2 that it hit earlier in the session.

Gold had leapt over 4% on Wednesday, while the U.S. dollar and bond yields dropped sharply after the Treasury's announcement it would increase buybacks of longer-dated bonds.

U.S. gold futures GCcv1 edged 0.5% higher to $4,566.40.

"Gold has come under routine profit-taking pressure following the previous session's strong gains," said Jim Wyckoff, a market analyst at American Gold Exchange.

The somewhat hawkish U.S. Federal Reserve minutes and higher oil prices, which have revived inflation concerns, also undermined the metal, he added.

"With our U.S. economists expecting the Fed to remain on hold, we see scope for gold to exceed $5,000/oz in 2027, potentially earlier," but with scope for volatility too, Morgan Stanley analysts said in a note.

Among other metals, spot silver XAG= rose 1.8% to $68.10 per ounce, platinum XPT= gained 0.3% to $1,830.28 and palladium XPD= edged 0.1% lower to $1,331.07.

It pared some losses after Treasury Secretary Scott Bessent said in a CNBC interview on Thursday that the government might increase repurchase of Treasury bonds, which could be more than $4 billion per issue.

Although investors often regard gold as a safeguard against inflation, higher interest rates can curb demand by increasing the opportunity cost of holding a non-yielding asset.