Gold gains as US dollar, bond yields pull back; BoE eyed

Gold rose on Thursday as the dollar retreated from two-week highs and US Treasury yields fell, with traders focusing on economic data for clues on the Federal Reserve's strategy on monetary support going forward.

Investors also awaited the outcome of a Bank of England meeting, where the central bank is expected to say that Britain's economy is heading for a much stronger recovery this year than previously expected, and is likely to start slowing its pandemic emergency support.

Spot gold was up 0.4% at $1,793 per ounce by 0948 GMT. US gold futures rose 0.5% to $1,793.50 per ounce.

"Market is pricing in a 'more distant' probability of a Fed rate hike after clarifications on Treasury Secretary Janet Yellen's remarks. That has been supportive for gold, with yields on long-term government bonds declining again and the dollar weakening," said Quantitative Commodity Research Analyst Peter Fertig.

"There is still an opportunity for gold to surpass resistance at $1,800, but it's also currently not that there would be a strong rush into gold," Fertig added.

Yellen said on Tuesday she saw no inflation problem brewing, downplaying earlier comments that rate increases may be needed to stop the economy overheating.

Benchmark US 10-year Treasury yields slipped below 1.6% and hovered close to a one-week low hit on Tuesday, reducing the opportunity cost of holding non-interest bearing gold.

The dollar index fell 0.3%, moving further away from a near two-week high hit on Wednesday.

Focus now shifts to Friday's US monthly jobs report, which is expected to show non-farm payrolls increased by 978,000 last month.

Meanwhile, palladium fell 0.5% to $2,957.66 per ounce, after scaling an all-time high of $3,017.18 on Tuesday on supply shortage.

Silver was up 0.8% at $26.70 per ounce, while platinum dipped 0.6% to $1,233.21.