Short-term interest rates fell on Tuesday, as more good news on inflation eliminated any chance of a imminent Federal Reserve tightening.

But long-term rates rose on surging gold prices and concern about the White House's deficit-cutting effort.

At 4 p.m. in New York, the yield on the 30-year Treasury was 6.82%, up from 6.81% on Monday. But six-month Treasury bills yielded a bond-equivalent 3.26%, down from 3.27%.

The government announced that consumer prices rose 0.1% in May - the consensus estimate was 0.2% - after a 0.4% rise in April.

The consumer report and Friday's announcement that the producer price index was unchanged in May rule out any possibility of a Fed tightening soon.

Gold Up $1.90 an Ounce

Kevin Flanagan, money market economist at Dean Witter Reynolds Inc., said a rise in gold prices pressured the long end. The metal rose $1.90 to $368.50 an ounce on the New York Commodity Exchange.

He said the bond market was also troubled by statements from Laura Tyson, chairwoman of the President's Council of Economic Advisers, that the White House is reluctant to seek more drastic deficit-reduction measures because of concerns about slow economic growth.

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