Gold gains as stocks dip on Washington woes, slow vaccine rollouts

Gold ticked higher on Tuesday as stocks slipped on political turmoil in Washington and the slow pace of COVID-19 vaccinations worldwide, although a firmer dollar and higher US Treasury yields limited gains.

Spot gold rose 0.3% at $1,849.91 per ounce by 0506 GMT, after touching its lowest since Dec. 2 in the previous session. US gold futures were flat at $1,850.20.

Asian stocks eased from record highs as Democrats in the US House of Representatives barrelled towards impeaching US President Donald Trump in the wake of Capitol siege last week.

"The macro picture is still positive for gold, so the market appears to be in dip-buying mode, but cautious about the scale of the dips," said Nicholas Frappell, global general manager at ABC Bullion.

"Short-term gold is still vulnerable to US dollar sentiment and yields, but gold is finding some support around the $1,830 level and it may use that as a base to consolidate and push higher from."

Benchmark 10-year Treasury yields held at 10-month highs as investors adjusted for higher government spending, helping the dollar gain and making gold expensive.

Higher bond yields increase the opportunity cost of holding the non-interest yielding gold.

"Gold looks underpriced at current levels. The new (virus) strain reminds us of the fact that 2021 may not be materially different from 2020 if the world doesn't get the vaccine fast enough," said Howie Lee, an economist at OCBC Bank.

The Federal Reserve will be cautious about the timeline of tapering, Lee said, even as money markets have increased bets it would start unwinding its asset-purchase programme by the end of the year.

Silver gained 0.8% to $25.12 an ounce. Platinum rose 2.4% to $1,055.69, while palladium climbed 0.2% to $2,375.91.