April 24, 2018 / 9:42 AM / 7 months ago

PRECIOUS-Gold gains as dollar retreats amid rising yields

    * Dollar index retreats from 3-month peak
    * Palladium resumes slide after Monday's 5 pct drop
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Recasts; updates prices, headline; adds comment, byline, NEW
YORK to dateline)
    By Renita D. Young and Jan Harvey
    NEW YORK/LONDON, April 24 (Reuters) - Gold prices gained
after three days of losses on Tuesday as the dollar retreated
from an earlier three-month peak and U.S. equities weakened,
even as benchmark U.S. Treasury yields passed 3 percent for the
first time in more than four years.
    The yield on U.S. 10-year Treasury notes             rose
above 3 percent as investors reduced their U.S. bond holdings on
worries about rising inflation and growing government debt
supply.       
    Rising yields typically make gold less attractive since it
does not bear interest.
    But a retreat in world stocks after yields crossed 3 percent
and weakness in the U.S. dollar drew investors to gold and
lifted its value, since it is priced in the greenback, said
David Meger, director of metals trading at High Ridge Futures in
Chicago.                                
    "The dollar has been a driving force as of late. We've been
seeing a little weakness in equities today, too," Meger said.
    Spot gold         gained 0.5 percent to $1,330.84 per ounce
by 1:34 p.m. EDT (1734 GMT), while U.S. gold futures        for
June delivery settled up $9, or 0.7 percent, at $1,333.
    Gold is often seen as a safe store of value in times of
elevated geopolitical or financial risk. 
    It has benefited in recent weeks from concerns over the
U.S.-China trade dispute, sanctions on Russia and unrest in the
Middle East, but has been kept in check by the prospect of
further interest rate hikes from the Federal Reserve. 
    "Based on interest rates, prices should be lower," said
Capital Economics analyst Simona Gambarini. "But there are a lot
of other factors, and a lot of tensions that have been boosting
prices... we think gold will continue to trade in this range
between $1,300-1,350 depending on what happens with those risks,
and the Fed hiking rates."
    Autocatalyst metal palladium        lost 0.5 percent to 
$973.65 an ounce, earlier hitting near a two-week low of
$960.47. It plunged 5 percent Monday after the United States
gave American customers of Russia's biggest aluminum producer
Rusal more time to comply with sanctions.             
    Rusal owns a 28 percent stake in Norilsk Nickel          ,
the world's biggest palladium producer. 
    "(Palladium) has followed base metals prices on their
downward trajectory now that the United States is considering
lifting the sanctions against Rusal and probably will not impose
further sanctions against Russia," Commerzbank said in a note.
    Platinum        increased 1.6 percent to $932.10 an ounce,
earlier dropping to $910.50, a 2-1/2-week low. Silver       
gained 1.2 percent to $16.72 an ounce after falling more than 3
percent in the previous session. 

    
 (Reporting by Jan Harvey and Renita D. Young; Additional
reporting by Swati Verma in Bengaluru; editing by Alexander
Smith and Andrea Ricci)
  
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