Gold prices off 2-1/2-month low as US Treasury yields pull back

Gold prices on Thursday clawed back from a 2-1/2-month low marked in the previous session, as US Treasury yields retreated, lifting the non-yielding bullion's appeal.

Spot gold was up 0.4% at $1,782.64 per ounce by 0336 GMT, having dropped to its lowest since Nov. 30 at $1,768.60 on Wednesday. US gold futures gained 0.6% to $1,783.10.

"The US long-dated yields backing of this week's highs is offering some support. It also appears dip buyers from China returned from Lunar New Year holidays," said OANDA senior market analyst Jeffrey Halley.

Benchmark 10-year Treasury yields retreated from a near one-year peak hit on Wednesday. Lower yields reduce the opportunity cost of holding bullion, which pays no interest.

Federal Reserve officials were still prepared to keep their easy monetary policy on track to help heal the economy ailing from the impact of the coronavirus pandemic, minutes of the US central bank's January policy meeting showed.

US retail sales rebounded sharply in January, while US producer prices increased by the most since 2009, suggesting inflation was starting to creep up.

Investor focus remained on the developments of a $1.9 trillion US coronavirus relief plan.

"The retail sales number overnight was driven by Federal stimulus cheques, and if anything, highlights that they must keep up stimulus to keep the economy going," Halley said.

Gold is viewed as a hedge against inflation, likely from widespread stimulus.

Silver eased 0.1% to $27.32 an ounce. Platinum gained 2.2% to $1,280.54 and palladium rose 0.7% to $2,387.93.