Gold prices hovered near the key $1,900 per ounce level on Friday, helped by a weaker dollar and US bond yields, as investors shrugged off data that showed a rise in US inflation and hoped the Federal Reserve would not change its dovish stance.

FUNDAMENTALS

• Spot gold was up 0.1% at $1,899.28 per ounce, as of 0059 GMT. Prices have risen 0.5% so far this week.

• US gold futures rose 0.3% to $1,901.20 per ounce.

• The dollar index fell to trade at 90.057 after hitting a near one-week high in the previous session.

• The benchmark US 10-year Treasury yields dropped to a three-month low, reducing the opportunity cost of holding non-interest bearing bullion.

• Data showed US consumer prices rose solidly in May, leading to the biggest annual increase in nearly 13 years, while weekly jobless claims dropped to their lowest level in nearly 15 months last week.

• The European Central Bank raised its growth and inflation projections on Thursday but pledged a steady flow of stimulus over the summer, fearing that a retreat now would accelerate a concerning rise in borrowing costs and choke off the recovery.

  • Investors are not freaking out over a spike in US inflation in the past two months, showing confidence that the Fed is deftly handling a rebound in economic growth.

• The US central bank is likely to announce in August or September a strategy for reducing its massive bond-buying program, but won't start cutting monthly purchases until early next year, a Reuters poll found.

• Silver was steady at $27.96 per ounce, palladium slipped 0.5% to $2,763.87, while platinum edged 0.1% lower to $1,150.31.