* U.S. Treasury yields hit fresh 14-month peak
* Dollar index crosses four-month peak
* Palladium inches up after Monday's 5.5% decline
By Asha Sistla
March 30 (Reuters) - Gold prices slipped on Tuesday to their lowest in more than two weeks, weighed down by a firm U.S. dollar and Treasury yields as expectations of a swift economic turnaround grew with vaccination rates gaining traction.
Bullion, often sought as a safe store of value in times of economic turmoil, is sensitive to rising yields as they raise the opportunity cost of holding non-yielding gold.
Spot gold XAU= fell 0.4% at $1,705.25 per ounce by 0633 GMT. Earlier in the session, bullion touched $1,703.39, its lowest since March 12.
U.S. gold futures GCv1 were down 0.4% at $1,707.80 per ounce.
"Primary weighing factor on gold prices is the continuous rise in the U.S. long-term yields," said DailyFX strategist Margaret Yang, adding that although gold prices should rise being an inflation hedge, there is a constant decline in prices.
This decline in gold prices, "can be attributed to reflation hopes as this infrastructure plan will not only inject liquidity into the market, it'll actually pump money into the real economy ... therefore, the economic outlook is brighter than before."
Longer-dated Treasury yields hit a 14-month high amid expectations that U.S. President Joe Biden's infrastructure initiative could further bolster economic growth. US/
Further pressuring gold, dollar climbed to a one-year high against the yen on Tuesday as investors fretted about the potential fallout from the collapse of a hedge fund, identified as Archegos Capital. USD/ MKTS/GLOB consolidation is breaking and if downward pressure takes prices below the $1,700 level, it could get ugly fast," Edward Moya, senior market analyst at OANDA wrote in a note.
"Massive support throughout the pandemic has been the $1,670 level and if that doesn't hold, not much support is seen until the $1,600 level."
Palladium XPD= gained 0.7% to $2,545.90, having slid 5.5% in the previous session.
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