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PRECIOUS-Gold set for second monthly dip as high U.S. yields erode appeal

    * Gold down 4.5% for the month 
    * Silver set for first monthly fall in three 
    * Palladium, platinum eye best month since November

 (Updates prices)
    By K. Sathya Narayanan
    Feb 26 (Reuters) - Gold fell on Friday and was headed for
its second straight monthly decline, as U.S. Treasury yields
held near a more than one-year high, eroding bullion's safe
haven status.
    Spot gold        fell 0.4% to $1,762.44 per ounce by 1321
GMT, having earlier touched its lowest since June 2020 at
$1,754.70. 
    U.S. gold futures        dropped 0.9% to $1,760.00.
    "The main factor weighing on gold is the surge in bond
yields, which makes gold less attractive because it doesn't pay
any interest," said Commerzbank analyst Carsten Fritsch.
    Bullion had dropped 1.9% on Thursday and was down about 4.5%
for the month.
    The benchmark U.S. 10-year Treasury yields             on
Friday were hovering near an over one-year high scaled in the
previous session.
    While gold often benefits from expectations for more
stimulus measures, given its status as an inflation hedge,
government debt has turned out to be a more attractive bet for
investors of late since bullion does not pay any fixed interest.
    "Gold fell out of favour of investors, a clear sign you can
see from continued outflows in gold exchange-traded funds
(ETFs)," Fritsch said. 
    Holdings in the world's largest gold-backed ETF, SPDR Gold
Trust      , fell 0.6% on Thursday to its lowest since May
2020.         
    "Bullion has failed to hold $1,800 and has now broken the
support at $1,775, opening space for further declines,"
ActivTrades chief analyst Carlo Alberto De Casa said in a note.
    "A strong greenback could be detrimental for gold as
investors are switching back to bonds in the search for yields."
       
    Silver        slipped 2.2% to $26.80 an ounce and was poised
for its first monthly decline in three, down 0.7% so far.
    Palladium        declined 2.4% at $2,343.11, while platinum
       fell 2% to $1,191.60. 
    However, both the auto-catalyst metals were set to register
their best month since November.

 (Reporting by K. Sathya Narayanan and Sumita Layek in
Bengaluru; Editing by Shinjini Ganguli and Amy Caren Daniel)
  
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