Gold prices steadied in European trade on Wednesday below $1,300 for the first time in five months as dollar extended gains against a basket of major rivals on the back of a surge in long-term US treasury yields. 

As of 10:40 GMT, gold prices inched up to $1,291.10 an ounce from the opening of $1,289.78, with a session-high at $1,296.92, and a low at $1,289.59. 

Gold lost 1.8% yesterday, the third loss in a row and the largest since July 3, 2017, marking five-month lows at $1,288.69 as dollar rallied. 

The dollar index rose 0.2% on Wednesday on track for the third profit in a row, hitting five-month highs at 93.40, heaping pressure on dollar-denominated commodity futures. 

Dollar's surge came alongside a similar one in 10-year US treasury yields to seven-year highs at 3.095%, rekindling fears about yawning gaps in interest rates between the US and other countries. 

Yields are backed by strong inflation outlook as oil prices hit 3-1/5 year highs, paving the way for policy tightening and interest rate hikes by the Federal Reserve. 

Gold holdings at SPDR Gold Trust, the world's largest gold-backed investment fund, steadied at 856.17 tonnes on Tuesday with no change, the lowest since April 5, after rising 3%, or 23.63 tonnes in 2017, while gold prices rose 13% last year.

Oil prices fell in European trade on Wednesday for the second session, with Brent backing off 3-1/5 year high on profit-taking, while US commercial crude inventories rose unexpectedly according to initial data. 

As of 09:15 GMT, US crude fell to $70.95 a barrel from the opening of $71.01, while Brent fell to $77.85 a barrel from the opening of $78.06. 

US crude lost 0.2% yesterday, the second loss in three days, while Brent shed 0.5% away from 3-1/5 year highs at $79.43. 

The American Petroleum Institute reported a buildup of 4.9 million barrels in US commercial stocks in the week ending May 11, the third weekly increase in a row, while analysts expected a 0.8M drop. 

Total stocks have now reached 464.4 million barrels, the highest in 2018 and a negative sign for demand in the US. 

Now traders await the official report from the Energy Information Administration later today, expected to show a 1.1 million barrels drawdown. 

US output rose 80 thousand bpd in the previous reading, the 11th increase in a row to a total of 10.7 million bpd,  a record high, with analysts expecting yet another increase to come. 

European consumer prices rose 1.2% in April according to the final reading, matching expectations and the preliminary reading, and down from 1.3% in March. 

Core prices, excluding food and energy, rose 0.7% as expected, same as as the preliminary reading. 

Bitcoin declined over 3% on Wednesday for the third straight session to four-week lows, amid renewed selling pressures on cryptocurrencies after tech giant Microsoft announced a ban on crypto ads. 

At Bitstamp, bitcoin fell $262, or 3.1% to $8,220 from the opening of $8,482, with a session-high at $8,505, and an April 14 low at $8,100. 

Bitcoin lost 2.2% on Tuesday as short traders dominate the trend amid concerns of increased regulatory pressure in Japan and further financial investigation in South Korea. 

Bitcoin dropped 9.6% last week, the first loss in six weeks after South Korean authorities launched widespread investigations into crypto exchanges and the market. 

Market value of cryptocurrencies fell $18 billion on Wednesday to a total of $373 billion, moving below $400 billion again and heading for April lows. 

After Facebook, Google, and Twitter, Microsoft lopped another hit at the crypto market by banning all crypto-related ads on the search engine Bing. 

The company stated the reason behind the ban is the current illegal position for crypto messaging, which increases risk of fraud and misguidance for Bing users. 

The company said the main factor was that there are no official regulations for crypto products so far, which prompted Microsoft to take precautionary actions until the issue is addressed by regulatory authorities

Bing plans to start implementing a global-wide ban between June and early July.