PRECIOUS-Gold rises on hopes of rates staying low, firm yields cap gains

* U.S. consumer prices post largest gain since 2009
* U.S. 10-year Treasury yields climb to over 1-month high

(Updates prices)
By Shreyansi Singh
May 13 (Reuters) - Gold edged up on Thursday on hopes that
the U.S. Federal Reserve would not raise interest rates anytime
soon, although a surge in U.S. Treasury yields following a sharp
rise in April consumer prices capped gains.
Spot gold XAU= was up 0.3% at $1,821.02 per ounce by 0712
GMT, after falling more than 1% in the previous session.
U.S. gold futures GCv1 eased 0.1% to $1,821.60.
"We're still getting on the aftershock of that consumer
price index release and the expectations now from the market
that the Fed will be forced to do something about inflation," IG
Market analyst Kyle Rodda said.
The Fed, however, has been reiterating that inflation will
be so transitory that it won't have to worry about adjusting
interest rates, he added.
Data on Wednesday showed U.S. consumer prices increased the
most in nearly 12 years in April, intensifying concerns over
rising inflation. Fed Vice Chair Richard Clarida said the twin surprises of
weak jobs growth and strong inflation in April has not dented
the U.S. central bank's plans to keep its support for the
economy wide open. "The Fed is probably quite focused on unemployment as a
reason for keeping the narrative dovish," Nicholas Frappell,
global general manager at ABC Bullion, said.
The Fed pledged to leave borrowing costs unchanged until the
economy reaches full employment, and inflation hits 2% and is on
track to "moderately" exceed that level for some time.
"Given the Flexible Average Inflation target, there is
awareness that the Fed can allow for some inflationary room,"
Frappell added.
Lower U.S. interest rates put pressure on the dollar and
bond yields, raising the appeal of non-yielding bullion.
However, worries over rising inflation lifted benchmark U.S.
10-year Treasury yields US10YT=RR to their highest in more
than a month, while the dollar .DXY held firm. US/
Palladium XPD= rose 0.9% to $2,881.20 per ounce. Silver
XAG= was up 0.1% at $27.06 per ounce, while platinum XPT=
advanced 0.5% to $1,215.23.