U.S. CPI comes in below estimates, core in line with estimates
Dollar down 0.7, yields skid
Market bets on 25 bps Fed hike in May, pause in June

April 12 Reuters Gold prices jumped on Wednesday as signs of cooling inflation bolstered bets that the U.S. Federal Reserve may pause its policy tightening after a likely interest rate hike in May.

Spot gold was up 0.6 at 2,014.39 per ounce by 210 p.m. EDT 1810 GMT, after rising as much as 1.3 earlier. U.S. gold futures settled 0.3 higher at 2,024.90.

The Consumer Price Index CPI climbed 0.1 in March after advancing 0.4 in February. But in the 12 months through March, the core CPI gained 5.6, after rising 5.5 on the same basis in February.

The risks of not raising rates enough far exceeds overtightening so the Fed is probably going to go forward with the quarterpoint rate hike, the core justifies it, said Edward Moya, senior market analyst at OANDA.

There39;s still a tremendous amount of risk on the table, so gold should still see some strong flows headed its way.

Gold drew strength from a slide in the dollar and benchmark U.S. yields .

Markets are now pricing in a 69 chance of a 25basispoint rate hike in the May meeting, followed by 2to1 bets of a pause in June.

While gold is seen as a hedge against inflation, higher rates to tame rising price pressures weigh on the nonyielding asset39;s appeal.

Several officials at the Fed39;s meeting last month considered pausing interest rate increases over concerns of wider…