Gold edges up as yields ease, focus turns to Fed meeting
By Nakul Iyer
(Reuters) - Gold prices ticked up on Monday as U.S. Treasury yields backed off recent highs, countering pressure from a resilient dollar, as investors awaited further policy cues from the Federal Reserve's policy meeting.
Spot gold rose 0.1% to $1,728.78 per ounce as of 12:12 p.m. ET (1612 GMT). U.S. gold futures rose 0.4% to $1,726.20.
"Yields are calm this morning and the recent dip in gold is viewed as a buying opportunity by most," said David Meger, director of metals trading at High Ridge Futures.
The big question will be whether rising yields, on the back of optimism over an economic recovery, will pressure gold, or if growth stalls or inflation picks up, which should support gold, Meger added.
Benchmark U.S. Treasury yields eased off a more than one-year peak, restoring some of non-interest bearing gold's appeal.
"Whenever yields peak, that will be the bottom for gold," said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
"They (yields) still have room to extend higher but yields are not going to go up forever, so there's going to be a turning point. ... The higher we go, the closer we get to the turning point."
Also aiding gold was the signing of a $1.9 trillion U.S. relief bill into law, which spurred inflation fears, since bullion is used to hedge against rising prices.
Investors await a two-day Fed meeting that starts on Tuesday, with the focus on a recent spike in bond yields, fears about rising inflation and the economic outlook.
"Precious metals will be held hostage by Treasury markets as the Fed's reactive approach to the steepening in rates will continue to lead to investment outflows," TD Securities said in a note.
In other metals trading, silver rose 0.8% to $26.13 an ounce. Palladium gained 0.9% to $2,392.52 and platinum fell 0.2% to $1,202.95.
(Reporting by Nakul Iyer in Bengaluru; Editing by Paul Simao and Richard Chang)
