Gold prices are sliding lower early on Thursday on the back of a weak inflation report from the US; however, losses remain limited due to a weakness in the US dollar and in US Treasury yields. At the time of writing, GOLD is trading at a little above $1,836.

During the previous session, gold had climbed to an over one-week high after the inflation report from the US revealed a slight increase in consumer prices. An improvement in fuel prices was offset by a decline in airfares in the wake of the coronavirus pandemic, raising concerns about economic recovery and keeping inflation far below the Fed’s 2% target.

While prices have eased lower since then, gold is enjoying support from the US dollar that fell to a two-week low even as US Treasury yields also fell. The precious metal is considered a hedge against inflation and its safe haven appeal receives a boost whenever Treasury yields decline.

Gold also finds support from an improvement in physical demand across India – the world’s second largest consumer of the precious metal. According to government data, the safe haven metal’s imports rose by 72% YoY during January when consumers and jewelers rushed to make the most of the fall in prices.