NEW YORK: Gold prices rose from a two-week low on Wednesday as investors looked toward the safe-haven metal amid worries over an increase in inflation primarily due to rising fuel prices, although a stronger dollar and higher US yields kept gains in check.

Spot gold rose 0.6% to $1,847.39 per ounce by 1:50 p.m. ET (1750 GMT), having hit its lowest since May 19 at $1,827.80 earlier in the session. US gold futures settled 0.02% higher at $1,848.7.

“Investors now are desperate for more safe havens than just treasuries and that is why you are seeing gold outperforming,” said Edward Moya, senior analyst with OANDA.

Oil prices strengthened on Wednesday after European Union leaders agreed to a partial and phased ban on Russian oil.

“Inflation cannot really drop if these energy costs are that elevated. So I think the risk of much more aggressive tightening globally could really fuel the gold trade,” Moya added.

Banking on its safe-demand status as well, the dollar index gained 0.9%, while US Treasury yields also rose.

“We are seeing some short covering in the futures market and little bit of bargain hunting in the cash market after the recent selling pressure,” Kitco senior analyst Jim Wycoff said.

Investors are also looking ahead to US nonfarm payrolls 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 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.

Spot silver rose 1.5% to $21.85 per ounce, having hit a two-week low earlier.

Platinum rose 3.3% to $996.50, having gained as much as 4.4% to $1,006.93 earlier, rising on supply concerns from South Africa and Russia.

Palladium rose 0.3% to $2,005.18.