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PRECIOUS-Gold hits 3-month high as dollar, yields ease on U.S. retail sales data

    May 17 (Reuters) - Gold prices rose to a three-month high on
Monday, as a weaker dollar and a dip in Treasury yields boosted
metal's appeal after data last week showed U.S. retail sales
unexpectedly stalled in April.
       
    FUNDAMENTALS
    * Spot gold        was up 0.1% at $1,844.60 per ounce by
0035 GMT, after hitting its highest since Feb.10 in early Asian
trade.
    * U.S. gold futures        rose 0.4% to $1,845.60.
    * The dollar index        slipped from a near one-week high
touched last week, making gold less expensive for other currency
holders.       
    * Benchmark U.S. 10-year Treasury yields            
retreated further from a more than one-month high hit last week.
Lower bond yields reduce the opportunity cost of holding
non-interest bearing gold.      
    * Data on Friday showed U.S. retail sales unexpectedly
stalled in April as the boost from stimulus checks faded, but an
acceleration is likely in the coming months amid record savings
and a reopening economy.             
    * The weak retail sales report curbed rising inflation
worries and bets over a sooner-than-expected U.S. Federal
Reserve rate hike.
    * Gold tends to benefit from lower interest rate environment
as it reduces the opportunity cost of holding non-yielding
bullion.
    * Dallas Federal Reserve President Robert Kaplan on Friday
raised the prospect of a worrisome rise in U.S. inflation
expectations, as imbalances between supply and demand for labor
and goods put upward pressure on prices.             
    * Asian shares edged cautiously higher on Monday, catching
the tailwind from a bounce on Wall Street.            
    * Palladium        gained 0.2% to $2,898.24 per ounce,
silver        eased 0.1% to $27.38 and platinum        fell 0.2%
to $1,222.04.
            
DATA/EVENTS (GMT)
0200  China   Urban Investment (YTD) YY   April
0200  China   Industrial Output YY        April
0200  China   Retail Sales YY             April
1000  EU      Reserve Assets Total        April
    

 (Reporting by Brijesh Patel in Bengaluru; Editing by Rashmi
Aich)
  
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