Gold inches up as US yields ease; palladium hovers below record peak

Gold prices inched higher on Wednesday as the US Treasury yield retreated from a session high, while palladium held near record highs hit in the previous session as supply concerns linger.

Spot gold rose 0.2% to $1,781.96 per ounce by 1442 GMT, after falling about 0.8% in the previous session. US gold futures were up 0.2% at $1,779.70.

"Treasuries are coming in line a little bit so you're getting a bounce in gold," said Bob Haberkorn, senior market strategist at RJO Futures.

" Gold market is kind of discounting what Janet Yellen said yesterday, and seeing the fact that the Fed probably isn't in a position to raise rates at this point," Haberkorn said, adding however the US Treasury Secretary's statement on rates "threw some shade on the market."

Yellen initially said rate increases may be needed to stop the economy overheating as US President Joe Biden's spending plans boost growth, but later downplayed the remarks and said she saw no inflation problem brewing.

The benchmark 10-year yield backed off from earlier highs, while the dollar index was hovering close to a near two-week peak against its rivals.

Higher yields threaten gold's appeal as an inflation hedge as they increase the opportunity cost of holding bullion, which pays no interest.

Elsewhere, palladium fell 0.7% to $2,964.08 per ounce, after hitting an all-time high of $3,017.18 in the previous session, driven by concerns of a shortage of the metal.

Palladium, used mainly in emission-reducing auto catalysts for vehicles, has risen 21% so far this year.

Silver slipped 0.6% to $26.37 per ounce, while platinum fell 1.5% to $1,219.58. Both the metals hit their highest level in more than two months on Tuesday.