Gold slides 2pc to 3-week low on surging US yields

Gold prices shed nearly 2% on Tuesday on a firmer US dollar and higher Treasury yields, while hopes of a faster economic recovery further dampened demand for safe-haven bullion.

Spot gold slid 1.5% to $1,686.40 per ounce by 10:32 a.m. EDT (1432 GMT). Earlier in the session, bullion fell about 2% to its lowest since March 8 at $1,678.40. US gold futures fell 1.6% to $1,686.00 per ounce.

Benchmark US 10-year Treasury yields rose to a 14-month peak bolstered by hopes of stronger growth and inflation ahead of US President Joe Biden's multitrillion-dollar infrastructure plan.

"If the move higher in Treasury yields continues, that's just really providing some good support for the dollar and that's been driving gold down," said Edward Moya, senior market analyst at OANDA.

While gold is likely to see some pressure in the short-term, investors pricing in inflationary concerns could "eventually trigger a frenzy of gold buying," Moya added.

The dollar index jumped to a more than four-month high, making greenback-denominated gold more expensive for holders of other currencies.

Higher US Treasury yields have threatened gold's appeal as an inflation hedge as they increase the opportunity cost of holding bullion, which pays no returns.

"From a technical point of view, the (gold) price is playing with the key level of $1,700. A crucial support is placed at $1,670, a recent low, while the overall scenario for gold remains moderately bearish," ActivTrades chief analyst Carlo Alberto De Casa said in a note.

Elsewhere, silver fell 2.1% to $24.15 an ounce and platinum was down 1.3% at $1,160.00.

Expectations of a continued supply shortfall amid higher demand for the autocatalyst are driving prices for palladium, analysts said.

Palladium gained 1.7% to $2,572.50, having earlier risen over 3% after sliding 5.5% in the previous session.