Gold slides more than 1pc to 3-week low as US yields climb

Gold prices slid more than 1% on Tuesday as the US dollar rose on the back of higher Treasury yields and as expectations that speedy vaccinations would improve the economic outlook curbed demand for safe-haven bullion.

Spot gold slipped 1.4% to $1,687.76 per ounce by 1153 GMT. Earlier in the session, bullion fell by as much as 1.5% to its lowest since March 9 at $1,685.80. US gold futures fell 1.5% to $1,688.70 per ounce.

"Gold is under pressure as investors are expecting a strong economic rebound in the US because of the pace of vaccinations there and the stimulus driving investor sentiment and bond yields in the US to new highs again for the year," Fawad Razaqzada, market analyst with ThinkMarkets, said.

The dollar index jumped to a more than four-month high as benchmark US Treasury yields rose to a 14-month peak on expectations of stronger growth and inflation ahead of US President Joe Biden's multi-trillion-dollar infrastructure spending plan.

Gold is seen as a hedge against rising inflation, but firmer Treasury yields, which translate into a higher opportunity cost for holding bullion, have challenged that status.

Investors have been piling more money into riskier equity markets than gold, Razaqzada added.

Global stock markets rose as investors focused on the global COVID-19 vaccination programme.

"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 1.7% to $24.24 an ounce and platinum was down 0.8% at $1,166.19.

Palladium gained 0.4% to $2,537.98, having slid 5.5% in the previous session.