Gold inches lower as firm US Treasury yields weigh

Gold edged down on Wednesday, as firm US Treasury yields continued to pressure the non-yielding bullion, although prices held above the 8-1/2-month trough hit in the previous session.

Spot gold eased 0.2% at $1,734.16 per ounce by 0052 GMT, having dropped to their lowest since June 15 at $1,706.70 on Tuesday. US gold futures held steady at $1,734.10.

Benchmark US Treasury yields dipped for a fourth straight day after jumping to a one-year high last week, but held near 1.4% levels, making non-interest paying gold unattractive to investors.

After a sharp sell-off last week, US Treasuries have stabilised with bond market indicators and derivatives positioning pointing to near-term calm, but an improving economy could trigger another slide in their prices.

US Federal Reserve officials, facing a potential bout of inflation this spring in an economy turbocharged by vaccines and government spending, on Tuesday said they will nevertheless keep their easy money plans in place in hopes of speeding displaced Americans back to work.

Investors now await developments in a $1.9 trillion US stimulus bill passed by the House of Representatives last week, as the Senate begins debate over the legislation this week.

Silver dipped 0.3% to $26.67 an ounce, while palladium climbed 0.6% at $2,376.50. Platinum shed 0.3% to $1,200.50.