PRECIOUS-Gold firms as U.S. yields ease, palladium hovers below record peak

* Dollar slips off two-week peak hit earlier
* Silver, platinum off more than two-month highs hit on
Tuesday

(Adds comment, updates prices)
By Eileen Soreng
May 5 (Reuters) - Gold firmed on Wednesday as the dollar and
U.S. Treasury yields eased, while palladium held near record
highs propped up by supply constraints.
Spot gold XAU= rose 0.3% to $1,784.23 per ounce by 1:50
p.m. EDT (1750 GMT), after falling about 0.8% on Tuesday. U.S.
gold futures GCv1 settled up 0.5% at $1,784.30.
"Treasuries are coming in line a little bit so you're
getting a bounce in gold," said Bob Haberkorn, senior market
strategist at RJO Futures.
" The Gold market is kind of discounting what Janet Yellen
said yesterday, and seeing the fact that the Fed probably isn't
in a position to raise rates at this point," Haberkorn said,
adding however the U.S. Treasury Secretary's statement on rates
"threw some shade on the market."
Yellen initially said rate increases may be needed to stop
the economy overheating as U.S. President Joe Biden's spending
plans boost growth, but later downplayed the remarks and said
she saw no inflation problem brewing. The benchmark 10-year yield US10YT=RR backed off from
earlier highs, while the dollar index .DXY eased off a two
week-high, helping lift bullion. USD/ US/
Higher yields threaten gold's appeal as an inflation hedge
as they increase the opportunity cost of holding non
interest-bearing bullion.
"With the Fed pledging to keep rates lower for longer and
outlining a higher tolerance for inflation with its new
framework, commodity funds could see increasing inflows from
investors looking to hedge against inflation risk, which is
likely to spill over into gold," Metals Focus said in a note.
Elsewhere, palladium XPD= fell 0.7% to $2,964.08 per
ounce, after hitting an all-time high of $3,017.18 on Tuesday,
driven by concerns of a shortage of the metal used by automakers
in devices used to reduce emissions.
Silver XAG= dipped 0.4% to $26.43 per ounce, while
platinum XPT= fell 1.1% to $1,224.45. Both metals hit their
highest level in more than two months on Tuesday.