Gold prices slipped on Tuesday after hitting a seven-week high in the previous session, as a rise in U.S. Treasury yields eclipsed support from a weaker dollar.
Spot gold was down 0.2% to $1,766.32 per ounce by 0245 GMT, after hitting its highest since Feb. 25 at $1,789.77 on Monday.
U.S. futures of the precious yellow metal eased 0.3% to $1,766.10 per ounce.
“Gold came off yesterday’s high against a backdrop of rising yields. But, the rise in yields didn’t echo into the dollar. The greenback’s soggy performance is supportive for gold,” said DailyFX currency strategist Ilya Spivak.
Benchmark 10-year U.S. Treasury yields rose above 1.6% after hitting a five-week low last week, increasing the opportunity cost of holding non-yielding bullion.
U.S. President Joe Biden met on Monday with a bipartisan group of lawmakers who have all served as governors or mayors, as the White House seeks a deal on his more than $2 trillion jobs and infrastructure proposal.
The yellow metal is seen as a hedge against inflation that could follow stimulus measures, but higher Treasury yields have dulled some of the appeal of the non-yielding commodity this year.
“As it comes to inflation, the more inflation we get and the less the Federal Reserve is able to ignore that, the worst for it is… Technically, gold’s trend is still pointing lower,” DailyFX’s Spivak said.
Although the U.S. central bank has reiterated its stance to keep monetary policy accommodative some time, Fed officials have said that any spike in inflation is likely to be temporary.
Offering some respite to bullion, the dollar index fell to a more than six-week low against its rivals, making the commodity less expensive for holders of other currencies.
Spot gold may slide more into a range of $1,744-$1,758 per ounce, following its failure to break a resistance at $1,785, according to Reuters technical analyst Wang Tao.
Silver fell 0.2% to $25.75per ounce, palladium dropped 0.9% to $2,786.78 and platinum slipped 0.3% to $1,202.32.