NEW YORK: Gold extended its slide to a fifth session, dipping to its lowest in more than two months on Wednesday as bets for an economic recovery boosted the dollar and benchmark US Treasury yields.

Investors also awaited policy cues from the minutes of the US Federal Reserve’s January meeting.

Spot gold fell 0.9% to $1,778.70 per ounce by 12:25 p.m. EST (1725 GMT), having hit its lowest since Nov. 30 at $1,768.60 earlier.

US gold futures fell 1.2% to $1,778.20.

“The US economy is expected to slowly recover,” said David Meger, director of metals trading at High Ridge Futures.

Optimism over the pandemic and ‘herd immunity’, is being shown in a slightly firm dollar and in the 10-year yields, which rose to their highest since February 2020, Meger added.

Growing optimism for a $1.9 trillion US stimulus plan and rising inflation expectations pushed up benchmark Treasury yields, which in turn lifted the dollar to a more than one-week peak.

Breakeven inflation, a measure of expected inflation, is at its highest since August 2014 at 2.2%.

While gold is considered an inflation hedge likely spurred by widespread stimulus, higher yields have challenged that status since they increase the opportunity cost of holding non-yielding gold.

But gold could come back into favour once other currencies start to outperform the US dollar later this year, said OANDA analyst Craig Erlam.

Meanwhile, the minutes of the Fed’s end-January monetary policy meeting are due at 1900 GMT.

The Fed has been consistent in stating it will continue to be accommodative, but “I don’t think we are going to see anything in the statement that we don’t already know”, High Ridge’s Meger said.

Auto-catalyst platinum fell 0.6% to $1,253.46 an ounce, well below Tuesday’s high of $1,336.50, a peak since September 2014.

Palladium declined 0.5% to $2,370.83, while silver rose 0.1% to $27.25.