* Silver jumps to two-month high, platinum rises 3.8%
* Palladium firms near $3,000 mark
* U.S. manufacturing sector slows in April (Updates prices)
By Sumita Layek
May 3 (Reuters) - Gold prices jumped more than 1% on Monday, with the rally spilling over into other precious metals as well, driven by a retreat in the dollar and U.S. Treasury yields.
"A combination of bond yields remaining tame, the dollar under pressure, the amount of fiscal and monetary stimulus in this market ... all of those factors continue to drive gold and silver prices higher," said David Meger, director of metals trading at High Ridge Futures.
The dollar index .DXY slipped 0.3%, making gold cheaper, while benchmark U.S. 10-year Treasury yields US10YT=RR also retreated, reducing the opportunity cost of holding non-interest bearing gold. USD/ US/
Gold also found support from data showing U.S. manufacturing activity grew at a slower pace in April. now await Friday's labour market numbers to gauge U.S. economic health.
But strong economic data can also push gold higher as it means inflation will rise, said Michael Matousek, head trader at U.S. Global Investors.
"We need to see gold get above the $1,800 level and sustain it for a little bit, and then it could be off to the races for $2,000."
Gold is considered a hedge against inflation.
Elsewhere, auto catalyst metal palladium XPD= rose 1% to $2,962.94 per ounce, after hitting an all-time high of $3,007.73 on Friday.
While output cuts by the automobile sector necessitated by a shortage of semiconductor components could reduce palladium demand this year, the impact would be relatively small compared with production losses from Russia's Nornickel, with a sizeable market deficit still expected, Heraeus Precious Metals said in a note. XAG= gained 3.6% to $26.84 per ounce after hitting $26.98, its highest mark since March 1. Platinum XPT= rose 2.6% to $1,229.84.
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