Gold slides 2pc to near 3-week trough as U.S. yields surge

Gold prices slipped nearly 2pc on Tuesday as a firmer dollar, higher Treasury yields and hopes for a faster U.S. economic recovery dampened demand for safe-haven bullion.

Spot gold slid 1.6pc to $1,685.43 per ounce by 12:44 p.m EDT (1644 GMT).

Earlier in the session, bullion fell about 2pc to its lowest since March 8 at $1,678.40. U.S. gold futures fell 1.7pc to $1,685.10.

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

"The short-term drivers just appear to be becoming very bearish for gold," said Edward Moya, senior market analyst at OANDA, pinning gold's recent weakness on a firmer dollar and higher yields.

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

"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 2.4pc to $24.07 an ounce and platinum was down 1.7pc to $1,156.00.

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

Palladium gained 1.4pc to $2,564.43, having earlier risen over 3pc after sliding 5.5pc in the previous session.