* SPDR Gold Trust holdings at 1-1\/2-month high<\/p>\n
* Dollar slips to near three-month low<\/p>\n
* Silver hits highest level since February (Updates prices)<\/p>\n
May 18 (Reuters) – Gold hit a near four-month peak on Tuesday but eased fractionally as U.S. yields inched higher, with a weaker dollar and inflation fears maintaining a floor under bullion prices.<\/p>\n
Spot gold fell 0.1% to $1,863.91 per ounce by 12:00 p.m. EDT (1600 GMT), after hitting its highest since Jan. 29 earlier in the session. U.S. gold futures fell 0.1% at $1,866.40.<\/p>\n
\u201cYields just picked up just a notch,\u201d said Phillip Streible, chief market strategist, Blue Line Futures in Chicago.<\/p>\n
\u201cThe weaker dollar has provided most of the support. (But) gold has had a pretty good run, but it\u2019s not in a bullish market at all.\u201d<\/p>\n
Benchmark U.S. Treasury yields inched higher, increasing the opportunity cost of holding gold.<\/p>\n
The dollar index fell to a near three-month low, making gold cheaper for other currency holders.<\/p>\n
\u201cThe narrative is clearly shifting towards inflation … but perhaps more critically, you have got the U.S. dollar weakness, which is probably the key and prime driver,\u201d said independent analyst Ross Norman.<\/p>\n
Analysts also noted that inflows into gold exchange-traded-funds indicated investors were buying gold to hedge against inflation worries.<\/p>\n
In the wake of rising prices in the United States, minutes of the Federal Reserve\u2019s last policy meeting due on Wednesday are expected to provide further clarity on monetary policy outlook and policymakers\u2019 views on inflation.<\/p>\n
\u201cFed will not be tempted to rock the boat in terms of the recovery which is gathering some momentum. Raising rates or discussion on tapering would probably be counterproductive at this stage,\u201d Norman said.<\/p>\n
Gold is also getting support from chart-based buyers after the bullion broke above its 200-day moving average, considered to be a bullish signal.<\/p>\n
Elsewhere, silver slipped 0.6% to $28 per ounce, after hitting its highest since Feb. 2 in the session.<\/p>\n
Palladium was flat at $2,900.44 per ounce, while platinum dipped 2.1% to $1,213.19.<\/p>\n