LONDON: Gold prices hit a one-week high on Wednesday as the dollar and US Treasury yields slipped, with bullion’s safe-haven appeal also buoyed by tensions surrounding Ukraine, in the run up to US consumer prices data later in the week.

Spot gold was up 0.4% to $1,791.40 per ounce by 1055 GMT, while US gold futures rose 0.5% to $1,793.20 per ounce.

Boosting bullion’s appeal, benchmark US Treasury yields and the dollar index retreated.

A softer US dollar decreases bullion’s cost for overseas buyers.

While overall markets are more optimistic amid fading worries over the Omicron coronavirus variant, resulting in a rise in risk-related assets, gold has joined the bandwagon mostly because of its inverted correlation with Treasury yields and the dollar, said Ricardo Evangelista, senior analyst at ActivTrades.

But gold’s upside may be limited, and it was not likely to move above the $1,810 level, especially with the narrative shifting back to central banks’ tightening policy, which was likely to drive further US dollar gains, added Evangelista.

The market’s focus remained on Friday’s US Consumer Price Index (CPI) report that may influence the timeline of the Fed’s tapering of economic support going into its next policy meeting on Dec. 14-15.

Gold prices were likely to see only moderate moves until the inflation data, said Commerzbank analyst Daniel Briesemann in a note.

Reduced stimulus and interest rate hikes tend to push government bond yields higher, raising the opportunity cost of holding gold, which bears no interest.

Gold’s safe-haven appeal could also be profiting from the escalating geopolitical tensions over Ukraine, Briesemann added.

US President Joe Biden threatened to impose “strong economic and other measures” on Russia if it invades Ukraine.

Spot silver shed 0.1% to $22.45 per ounce, platinum rose 0.6% to $957.50 per ounce and palladium dipped 0.7% to $1,839.45.