09:36 AM EDT, 06/12/2024 (MT Newswires) -- Gold traded higher early on Wednesday following a report that U.S. inflation rose less than expected last month, sending the dollar and treasury yields sharply lower.

Gold for August delivery was last seen up US$30.10 to US$2,356.70 per ounce.

The U.S. Bureau of Labor Statistics said its Consumer Price Index (CPI) was up 3.3% annualized in May, down from a 3.4% pace in April and under expectations for a 3.4% rise according to Marketwatch. Core CPI, which excludes volatile food and energy, was up 0.2% from April, down from 0.3% in the prior month and under expectations for a 0.3% rise.

The data comes ahead of the afternoon end of the Federal Reserve's policy committee meeting that is expected to conclude with no change to current interest rates, but the report may advance the timetable for the start of rate cuts. The CME Fedwatch tool now sees rate cuts coming as soon as September, while prior to the CPI report it had been expecting easing would not begin before December.

The dollar was sharply lower following the report, with the ICE dollar index last seen down 0.79 points to 104.44.

Treasury yields also fell, bullish for gold since it offers no interest,. The U.S. two-year note was last seen paying 4.712%, down 12.8 basis points, while the yield on the 10-year note was down 9.9 basis points to 4.306%