Gold price hits two-week low as US yields approach 3 pct, lifting dollar

New York (Apr 23 )  Gold hit a two-week low on
Monday, as investors piled into the dollar with U.S. Treasury yields approaching 3 percent and geopolitical tensions eased.
    The yield on 10-year U.S. Treasuries             hit its
highest since January 2014, lifting the dollar index       to a
seven-week peak and making dollar-priced gold costlier holders
of other currencies.                   
    "If we break above (3 percent) it will be first time in 5
years this has happened and this increases opportunity cost of
holding (non-yielding) gold," said Mitsubishi analyst Jonathan
Butler.
    But he said the reason yields were rallying was because
interest rates were expected to climb due to rising inflation.
"If inflation is rising, gold provides a hedge," he said.
    Butler said he saw longer term upside risk for gold from
rising inflation, returning geopolitical tensions and a U.S.
currency stuck in a long-term downtrend as central banks around
the world begin raising rates.
    Spot gold        was down 0.5 percent at $1,327.93 per ounce
at 1005 GMT, after earlier touching its lowest since April 9 at
$1,326.91.
    U.S. gold futures         fell 0.6 percent to $1,329.80 per
ounce.
    Gold, seen as a safe haven in times of political turmoil,
was also under pressure after North Korea said at the weekend it
would suspend nuclear and missile tests before planned summits
with South Korea and the United States.
    Added to this were signs that U.S. China relations might be
thawing.            
    But easing world stocks limited gold's losses, as investors
awaited earnings from global tech firms and U.S. bond yields
approached peaks that hurt risk appetite in the past. Gold often
trades counter to equities, which are seen as risky assets.
    A trader in Hong Kong said gold prices were also underpinned
by the arbitrage in Asia.
    Speculators raised their net long or buy positions in COMEX
gold by 5,382 contracts to 143,594 contracts in the week to
April 17, U.S. Commodity Futures Trading Commission data showed
on Friday.            
    Spot gold may test support at $1,326 per ounce, following
its failure to break resistance at $1,354, Reuters technical
analyst Wang Tao said.            
    Among other precious metals, spot silver        fell 1
percent to $16.94 per ounce.
    Platinum        was down 0.1 percent at $921.80 an ounce,
having hit a two week low of $914.50, while palladium      
dropped 1.4 percent to $1,016 an ounce.