Gold prices at 3-1/2-month high on weaker dollar, inflation anxiety

Spot gold was up 0.2% at $1,868.89 per ounce by 0101 GMT, after hitting its highest since Feb. 1 in early Asian trade. US gold futures rose 0.1% to $1,869.40 per ounce.

The dollar teetered near multi-month lows against European currencies. A weaker greenback makes gold more appealing for other currency holders.

Recent economic readings out of the United States have sparked concerns over rising inflation and raised bets over an earlier-than-expected Federal Reserve rate hike.

Dallas Federal Reserve President Robert Kaplan on Monday reiterated his view that he does not expect interest rates to rise until next year.

Gold tends to benefit from lower interest rate environment as it reduces the opportunity cost of holding non-yielding bullion.

Investors now await minutes of the U.S. Fed’s last meeting, due on Wednesday, for more cues on the U.S. central bank’s monetary policy.

Japan’s economy shrank more than expected in the first quarter as the slow vaccine rollout and a resurgence in COVID-19 infections hit consumption.

SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.7% to 1,035.93 tonnes on Monday from 1,028.36 tonnes in the prior session.

Palladium gained 0.3% to $2,911 per ounce, silver rose 0.2% to $28.23 and platinum edged 0.2% higher to $1,242.27.