Gold eases on robust yields as focus turns on U.S. inflation data

By Kavya Guduru

(Reuters) - Gold edged lower on Monday, weighed by a firmer dollar and elevated Treasury yields, as investors focused on key inflation data due later this week that could underpin faster rate hikes by the U.S. Federal Reserve.

Spot gold was last down 0.2% at $1,799.75 per ounce at 13:37 ET (1837 GMT), having hit a three-week low on Friday.U.S. gold futures settled up 0.1% at $1,798.80.

"We've got inflation working in gold's favor, but yields are pushing prices lower leading to a tug-of-war between these two factors," said Bob Haberkorn, senior market strategist at RJOFutures.

The sentiment on gold is buy-and-hold, with prices settling into a range of around $1,800, Haberkorn added.

U.S. 10-year Treasury yields rose to their highest level in two years, as the dollar <.DXY> ticked up amid bets U.S. inflation will bolster the case for higher interestrates. [US/] [USD/]

Investors now await inflation data due on Wednesday. U.S. core CPI is expected to have risen to its highest in decades at 5.4% in December, up from 4.9% in the prior month. [.N]

Gold is considered a hedge against higher inflation, but rising U.S. interest rates increase the opportunity cost of holding non-yielding bullion, while a stronger dollar makes theprecious metal expensive for overseas buyers.

Stock markets fell on Monday as bets that the U.S. Federal Reserve could raise interest rates as soon as March led investors to pare risky assets. [MKTS/GLOB]

"Trader and investor risk aversion is not keen early this week, but neither is their risk appetite," Jim Wyckoff, a senior analyst at Kitco Metals, wrote in a note.

Spot silver rose 0.5% to $22.42, platinum dropped 2% to $936.25 and palladium was down 1.3% at $1,908.82.

(Reporting by Seher Dareen in Bengaluru; Editing by Kirsten Donovan)