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CORRECTED-PRECIOUS-Softer dollar, slump in yields extend gold's rally

(Corrects paragraph 1 to say six-day winning streak and not five)

* BofA sees gold averaging $1,828 in 2021

* Benchmark U.S. yields hit more than four-month low

July 8 (Reuters) - Gold gained on Thursday, building on a six-day winning streak as the U.S. dollar eased and Treasury yields extended their slump to a more than four month low.

Spot gold was up 0.6% to $1,814.00 per ounce at 1135 GMT. U.S. gold futures were up 0.7% to $1,814.30.

The dollar index edged 0.1% lower, making gold cheaper for other currency holders. Benchmark U.S. 10-year Treasury yields also slipped, lowering the opportunity cost of holding non-yielding bullion.

“The general view for gold is upwards ... and the one obstacle in the market that prevents gold from rising and pulls it back is the dollar. With the dollar weakening somewhat, the metal is up again,” said Commerzbank analyst Carsten Fritsch.

He said there wasn’t any “new surprise” in the minutes from the U.S. Federal Reserve’s latest monetary policy meeting, adding the drop in bond yields was price-positive for gold.

The minutes from the Fed’s June 15-16 meeting said that “various participants” felt conditions for reducing the central bank’s asset purchases would be “met somewhat earlier than they had anticipated”.

Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding bullion.

“While a pick-up of inflation should bring new buyers into the (gold) market, tighter monetary policy is set to keep the metal within recent ranges,” BofA Global Research said in a note, forecasting gold to average $1,828 this year.

Market participants also took stock of the European Central Bank setting a new inflation target on Thursday after an 18-month strategy review.

Elsewhere, platinum dropped 1.2% to $2,817.66 and palladium fell 1.2%, to $1,071.52.

BofA expects platinum demand to rise, citing increased substitution from palladium and platinum’s role in the hydrogen economy.

“We see further upside from here, especially when recent disruptions in the auto industry subside,” the bank added.

Silver was little changed at $26.11 an ounce. (Reporting by Arundhati Sarkar in Bengalur Additional reporting by Nakul Iyer Editing by David Goodman, Mark Potter and David Evans)

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