PRECIOUS-Gold gains on weaker dollar, U.S. stimulus hopes

(Updates prices)
* 10-year Treasury yields hit highest since March
* Investors await progress on U.S. COVID-19 relief package
* Interactive graphic tracking global spread of coronavirus:
https://tmsnrt.rs/3mvcUoa

By Sumita Layek
Feb 8 (Reuters) - Gold prices edged higher on Monday, as
softer U.S. jobs data cemented hopes of further fiscal stimulus
and pressured the dollar, although bullion's gains were capped
by higher Treasury yields.
Spot gold XAU= was up 0.2% at $1,816 per ounce by 0732
GMT. U.S. gold futures GCv1 rose 0.2% to $1,816.10.
"Markets are justifiably spooked by the very low non-farm
payrolls on Friday and that has raised economic uncertainty as
well as high expectations for more fiscal stimulus from the
U.S., gold has responded to that," said Howie Lee, an economist
at OCBC Bank.
The dollar .DXY moved further away from an over two-month
peak hit on Friday, hurt by a weaker U.S. jobs data that stoked
concerns of a slow recovery in the United States. USD/
However, limiting gold's advance was benchmark 10-year
Treasury yields US10YT=RR at their highest since March last
year. Higher yields increase the opportunity cost of holding
non-yielding bullion. US/
Yields are "probably the biggest single headwind" for gold,
Nicholas Frappell, global general manager at ABC Bullion said,
adding gold remains vulnerable to the dollar, which has more
room to extend its recent gains.
Investors' focus now remains on the progress of the $1.9
trillion COVID-19 relief package, which House Speaker Nancy
Pelosi believes will pass before March 15 with or without
bipartisan support. Gold can rise to $1,900 levels later in 2021 as Treasury
yields are capped at some stage and focus shifts to inflation
expectations, OCBC's Lee said. Breakevens on 10-year Treasury Inflation-Protected
Securities US10YTIP=RR , which measure average annual inflation
expectations for the coming decade, have jumped to 2.19%, the
highest level since mid-2018. Gold is considered a hedge against inflation and currency
debasement, likely from widespread stimulus.
Among other precious metals, spot silver XAG= gained 1% to
$27.08 an ounce, platinum XPT= rose 1.7% to $1,142.46 and
palladium XPD= was steady at $2,338.06.