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PRECIOUS-Gold recoups losses as U.S. yields slip after CPI data

    * European Central Bank holds policy meeting on Thursday
    * Gold taking cues from the Treasury market -analyst 

 (Updates prices)
    By Swati Verma
    March 10 (Reuters) - Gold erased earlier losses to hit a
one-week high on Wednesday, as U.S. Treasury yields eased after
subdued inflation data.
    Spot gold        rose 0.5% to $1,723.01 per ounce by 1:59
p.m. EDT (1859 GMT), having bounced as much as $1,723.71, its
highest since March 3. 
    U.S. gold futures        settled 0.3% up at $1,721.80.
    "Gold is still taking cues from the Treasury market and 
today's data lessens worries about near-term inflation," said
Edward Moya, senior market analyst at OANDA.
    "If today's 10-year note sale has decent demand, gold prices
could eventually make a run towards $1,730. ... The $1,700 level
will provide key support ... but that should hold unless the
bond market sell-off resumes," Moya said.
    10-year U.S. Treasury yields dropped after data showed U.S.
consumer prices increased in February, though underlying
inflation remained tepid.                   
    Gold's status as an inflation hedge has been challenged by
higher bond yields, which translate into a higher opportunity
cost of holding non-yielding bullion. 
    Prices fell to their lowest in nine-months on Monday, at
$1,676.10.
    Real rates have risen sharply over the last few weeks due to
higher nominal rates, without a commensurate rise in inflation
expectations, TD Securities wrote in a note.
    "With massive Treasury issuance on the horizon, the pressure
on higher rates should continue to weigh on precious metals in
the near-term."
    The U.S. House of Representatives paved the way for a $1.9
trillion U.S. COVID-19 relief bill to be considered on
Wednesday.             
    The European Central Bank is also grappling with a recent
rise in yields, but policymakers remain divided on large-scale
market intervention ahead of a policy meeting on Thursday.
            
    Silver        rose 0.7% to $26.09 an ounce. Palladium       
gained 0.1% to $2,299.70, while platinum        jumped 2.6% to
$1,199.06. 

 (Reporting by Swati Verma in Bengaluru; Editing by Kirsten
Donovan, Chris Reese and Jonathan Oatis)
  
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