PRECIOUS-Gold recoups losses as U.S. yields slip after CPI data

* European Central Bank holds policy meeting on Thursday
* Gold taking cues from the Treasury market -analyst

(Updates prices)
By Swati Verma
March 10 (Reuters) - Gold erased earlier losses to hit a
one-week high on Wednesday, as U.S. Treasury yields eased after
subdued inflation data.
Spot gold XAU= rose 0.5% to $1,723.01 per ounce by 1:59
p.m. EDT (1859 GMT), having bounced as much as $1,723.71, its
highest since March 3.
U.S. gold futures GCv1 settled 0.3% up at $1,721.80.
"Gold is still taking cues from the Treasury market and
today's data lessens worries about near-term inflation," said
Edward Moya, senior market analyst at OANDA.
"If today's 10-year note sale has decent demand, gold prices
could eventually make a run towards $1,730. ... The $1,700 level
will provide key support ... but that should hold unless the
bond market sell-off resumes," Moya said.
10-year U.S. Treasury yields dropped after data showed U.S.
consumer prices increased in February, though underlying
inflation remained tepid. US/
Gold's status as an inflation hedge has been challenged by
higher bond yields, which translate into a higher opportunity
cost of holding non-yielding bullion.
Prices fell to their lowest in nine-months on Monday, at
$1,676.10.
Real rates have risen sharply over the last few weeks due to
higher nominal rates, without a commensurate rise in inflation
expectations, TD Securities wrote in a note.
"With massive Treasury issuance on the horizon, the pressure
on higher rates should continue to weigh on precious metals in
the near-term."
The U.S. House of Representatives paved the way for a $1.9
trillion U.S. COVID-19 relief bill to be considered on
Wednesday. The European Central Bank is also grappling with a recent
rise in yields, but policymakers remain divided on large-scale
market intervention ahead of a policy meeting on Thursday.
Silver XAG= rose 0.7% to $26.09 an ounce. Palladium XPD=
gained 0.1% to $2,299.70, while platinum XPT= jumped 2.6% to
$1,199.06.