By Seher Dareen

(Reuters] – Gold gained more than 1% after Treasury yields eased. The Treasury data largely met inflation expectations in the United States, reducing the chances of the Federal Reserve tightening its policy long-term.

By 2:39 PM, XAU= had increased 0.7% to $1,967.61 an ounce ET (1839 GMT) reached its highest level in almost a month in the previous session. U.S.GCv1 closed up 1.4% at $1.976.

Data showing that inflation increased in March was less than expected by many market participants, led to the benchmark falling. USD/ US/ (Full Story) MKTS/GLOB

Gold is an inflation hedge. However, higher prices could lead central banks raising interest rates. Bond yields can rise, which may push up the bond yields. It also increases the cost to hold zero-yield gold. Bart Melek of TD Securities’ commodity strategy team said, “If core inflation doesn’t continue to surge to the same extent as headline inflation,”. Federal Reserve Governor Lael Mindard indicated that the combination effort to reduce its balance sheet, as well as a number of rate increases, would be able to bring down inflation. This will also add a moderation in “core good” inflation. Edward Moya from OANDA, senior market analyst, stated, “This does not change anything in the short-term.” The Fed is still likely to increase rates by 50 basis points next months to reduce inflation. As the Russian army prepares for another offensive, Gold continues to enjoy support. (Full Stories) Palladium lost 3.5% on profit-taking to $2,346.66 an ounce after reaching its highest point since March 24th at $2,550.58 Monday, due to the suspension of trading in the important Russian metal. Platinum fell 1.2% to $964.79. (Full story) A suspension of palladium supplies could increase in the near future, Standard Chartered analysts (OTC:), stated in a note. Spot gold rose 1.1%, to $25.35/ounce.