By Bharat Gautam

(Reuters). Gold stabilised on Thursday after U.S. Inflation data lifted prices above 1% in previous sessions. Traders were cautious about Federal Reserve’s policy stance due to fears that there would be an increase in underlying inflation pressures.

As of 0350 GMT, it was almost flat at $1852.36 an ounce. U.S. prices were unchanged at $1.853.30

U.S. consumer prices growth was slowing in April, as the price of gasoline fell to record levels. This suggests that inflation may have peaked. However, it’s likely to remain high for some time and the Fed will continue to hold the gas pedal.

After the data on consumer prices inflation, Bullion prices fell by 3.5% early Wednesday. However they rose to 1.1% later in the day.

The inflation reading comes on the heels of the Fed raising its benchmark overnight interest rate by an aggressive half a percentage point last week — the biggest hike in 22 years — as it moves to unwind ultra-easy pandemic-era monetary policy.

Bullion does not yield interest and, therefore, is sensitive to U.S. interest rates and bond yields. However, Thursday’s lower benchmark 10-year Treasury yields have decreased the gold holding cost.

Investors will still be concerned about inflation, but gold is now a good safe-haven investment after the sell-off. Brian Lan, managing Director at GoldSilver Central said that they are looking to secure precious metals support once China’s lockdowns have been lifted.

The U.S. Dollar remained steady at its 20-year highs, limiting gains in greenback bullion.

Matt Simpson, City Index senior market analyst, stated in a note that “with inflation expectations rising” and the evidence of money flowing to gold, it left him wondering if an important swing bottom formed yesterday (Wednesday).

Spot silver fell 0.4% to $21.47 an ounce. Platinum dropped 0.1% to $991.37 and palladium fell 0.2% at $2,032.07.