Picture used for illustrative purpose. File

Gulf Today Report 

Gold prices dropped on Wednesday as Treasury yields remain firm and the dollar declines due to higher inflation.

Spot gold was flat $1,743.01 per ounce by 05:49 GMT while US gold futures fell 0.4% to $1,741.30 per ounce.

Margaret Yang, a strategist at DailyFx said "though the dollar is weaker this morning, but a slight uptick in US Treasury yields is keeping gold's upside movement muted."

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In the United States, consumer prices surged to the highest in 8 ½ years, setting off higher inflation and supporting bullion.

The US dollar fell to three-week lows, making gold cheaper for holders of other currencies, while a slight rise in Treasury yields increased the opportunity cost of holding the metal that pays no return.

For gold to appeal to new bullish-pattern traders and push prices higher, it must test the $1,760-mark, said Avatar Sandu, a senior commodities manager at Phillip Futures.