Gold firms as dollar rally pauses

LONDON, May 10 (Reuters): Gold rose on Tuesday as the dollar in which it is priced steadied, prompting some investors to buy the metal ahead of US inflation data that could impact the Federal Reserve's monetary policy.

Spot gold was up 0.5 per cent at $1,862.48 per ounce by 1133 GMT, recovering slightly after falling as much as 1.7 per cent on Monday on the dollar's rally. US gold futures rose 0.1 per cent to $1,859.40 per ounce.

The dollar was steady after touching a 20-year high on Monday, while benchmark 10-year US Treasury yields were off 3-1/2-year peaks.

"Gold remains a hedge against a (potential) policy mistake and that still continues to attract some buyers at these lower levels," Saxo Bank analyst Ole Hansen said.

"From a technical perspective the key $1,850 level has now held on several occasions, so that's just attracting some short-covering," Hansen added.

Fears of a possible global economic slowdown amid aggressive policy tightening by major central banks and soaring inflation have soured sentiment in global share markets.

Spot silver rose 0.5 per cent to $21.90 per ounce, platinum gained 2.4 per cent to $977.88 and palladium fell 0.3 per cent to $2,090.16.