PRECIOUS-Gold slides 2% to near 3-week trough as U.S. yields surge

  • Reuters
  • Commodities News
PRECIOUS-Gold slides 2% to near 3-week trough as U.S. yields surge
Credit: © Reuters.

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* Benchmark U.S. 10-year Treasury yields hit 14-month high

* Dollar index jumps to four-month peak

* Palladium could remain above $2,100 in the next 2 years- analyst

* Crucial support for gold at $1,670/oz -analyst

By Shreyansi Singh

March 30 (Reuters) - Gold prices slipped nearly 2% on Tuesday as a firmer dollar, higher Treasury yields and hopes for a faster U.S. economic recovery dampened demand for safe-haven bullion.

Spot gold XAU= was down 1.6% at $1,684.64 per ounce by 1:57 p.m EDT (1757 GMT). Earlier in the session, bullion fell about 2% to its lowest since March 8 at $1,678.40. U.S. gold futures GCv1 settled 1.7% down at $1,686.

Benchmark U.S. 10-year Treasury yields US10YT=RR rose to a 14-month peak, bolstered by hopes of stronger growth and inflation ahead of U.S. President Joe Biden's multitrillion-dollar infrastructure plan. US/ short-term drivers just appear to be becoming very bearish for gold," said Edward Moya, senior market analyst at OANDA, pinning gold's recent weakness on a firmer dollar and higher yields.

While gold is likely to see some pressure in the short-term, investors pricing in inflationary concerns could "eventually trigger a frenzy of gold buying," Moya added.

The dollar index .DXY jumped to a more than four-month high, making greenback-denominated gold more expensive for holders of other currencies. USD/

Higher U.S. Treasury yields have threatened gold's appeal as an inflation hedge as they increase the opportunity cost of holding bullion, which pays no interest. US/

Meanwhile, palladium XPD= gained 1.8% to $2,574.26, having earlier risen over 3% after sliding 5.5% in the previous session.

Palladium will likely remain a tight market in the coming years, keeping prices elevated well above $2,100 for at least the next two years, said Jeffrey Christian, managing partner of CPM Group.

But palladium's widening premium over platinum could drive some autocatalyst demand substitution from palladium to platinum and limit palladium's gains slightly, he added.

Both platinum and palladium are used in automobile catalytic converters to limit exhaust emissions.

Silver XAG= fell 2.5% to $24.05 an ounce and platinum XPT= was down 1.8% at $1,154.89.

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