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PRECIOUS-Gold sags on strong U.S. bond yields, firmer dollar

    * Benchmark U.S. yields at highest since February 2020
    * Dollar rebounds from three-week low
    * Minutes of U.S. Fed Jan. meeting due at 1900 GMT

 (Adds comments, updates prices)
    By Nakul Iyer
    Feb 17 (Reuters) - Gold slipped to its lowest in over two
months on Wednesday as surging U.S. Treasury yields and a firmer
dollar continued to take a toll on the metal. 
    Spot gold        was down 0.2% at $1,790.90 per ounce by
1244 GMT, having hit its lowest since Dec. 1 at $1,782.40
earlier in the day after dropping 1.3% in the previous session. 
    U.S. gold futures        fell 0.5% to $1,789.70.
    "Gold markets seem to be fixated on U.S. yields," Natixis
analyst Bernard Dahdah said.
    "While there is an amazing amount of liquidity, we are going
out of lockdowns and we are expecting growth to go back to
normal levels," he added, noting that given such optimism
investors had little interest in the safe-haven metal.  
    Growing expectations for inflation spurred benchmark U.S.
Treasury yields to their highest since late February 2020. The
surge in yields in turn prompted the dollar        to rebound
from a three-week low, further pressuring gold.             
    Breakeven inflation              , a measure of expected
inflation, is at its highest since August 2014 at 2.2%. 
    While gold is seen as an inflation hedge, higher inflation
expectations have pushed yields up, increasing the opportunity
cost of holding non-yielding gold.
    Progress on a $1.9 trillion U.S coronavirus relief plan, as
President Joe Biden built support for the bill that includes
$1,400 stimulus checks, further drove yields up.             
    But gold could come back into favour once other currencies
start to outperform the U.S. dollar later this year, said OANDA
analyst Craig Erlam, adding that the metal could scale the
levels seen in November, December and January, when it pushed
above $1,900.    
    Investors are also looking forward to the minutes of the
Federal Reserve's end-January monetary policy meeting due on
Wednesday.
    Platinum       , used in catalytic converters for vehicles,
fell 2.5% to $1,230.36, well below Tuesday's high of $1,336.50,
a peak since September 2014.
    Palladium        declined 0.8% to $2,364.03, while silver
       eased 0.3% to $27.14. 

 (Reporting by Nakul Iyer in Bengaluru; Editing by Mark Potter
and Jan Harvey)
  
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