Gold prices jump more than 1% as US dollar, yields pull back

Gold prices on Monday rose more than 1% after declines in the previous two sessions, as the U.S. dollar and Treasury yields faltered, although risks from looming Federal Reserve interest rate hikes persisted.

Spot gold was up 1.2% to $1,661.85 per ounce by 10:32 a.m. EDT (1432 GMT), moving away from the more than two-week low touched in the last session.

U.S. gold futures climbed 1.2% to $1,668.00.

"The dollar's significantly lower ... yields are ticking lower," said Bob Haberkorn, senior market strategist at RJO Futures, who also noted some "safe-haven demand with heightened geopolitical risks."

Making bullion less expensive for overseas buyers, the dollar slipped 0.8%, while Treasury yields also retreated. [USD/][US/]

However, it's going to be "a struggle for gold to rally even though there's a lot of question marks out in the world. Investors want safety, but it's hard not to go into Treasuries with rates going up as fast as they are," Haberkorn added.

Gold faces headwinds as the Fed is expected to continue on its rate-hiking trajectory and increase its benchmark overnight interest rate by at least 75 basis points at the next policy meeting to curb stubbornly high inflation.

Prices have fallen 20% since scaling above the key $2,000 per-ounce level in March.

Even though gold is seen as a hedge against inflation, rising interest rates dim appeal of the non-yielding asset.

"In the near term, however, the recovery in risk assets bolstered by signs of stabilizing gilts is raising pressure on precious metal shorts, but gold prices need to break above $1,750/oz to extend the short squeeze," TD Securities said in a note.

Elsewhere, spot silver climbed 2.3% to $18.68 per ounce after posting eight consecutive daily losses. Platinum rose 1.8% to $914.68 and palladium added 1.3% to $2,013.94.

"A surplus palladium market in 2023 should ultimately lead to lower palladium prices, although near term the market remains tight," Heraeus Precious Metals said in a note.

(Reporting by Kavya Guduru in Bengaluru; Editing by Paul Simao)