09:36 AM EDT, 05/29/2024 (MT Newswires) -- Gold traded lower early on Wednesday as the dollar and yields rose ahead of U.S. inflation data coming on Friday.

Gold for August delivery was last seen down US$18.80 to US$2,360.50 per ounce.

The drop comes as the dollar strengthened ahead of Friday's release of the US Personal Consumption Expenditures Index, the Federal Reserve's preferred inflation measure. The data is expected to show an annualized rise of 2.7% in April, unchanged from March, according to Marketwatch, staying stubbornly above the central bank's 2% target.

"Gold's...bounce has run out of steam amid higher U.S. yields following Tuesday's weak auctions and ahead of Friday's key U.S. PCE print," Saxo Bank noted.

The dollar rose early, with the ICE dollar index last seen up 1.8 points to 104.79. A strong dollar pushes up the price of gold in other currencies, which in turn usually leads to selling pressure for the metal.

Treasury yields also rose, raising the carrying cost of owning gold since it offers no interest. The U.S. two-year note was last seen paying 4.964%, up 1.3 basis points, while the yield on the 10-year note was up 2.9 basis points to 4.586%.