PRECIOUS-Gold slips from more than two-week peak as U.S. yields surge

* U.S. Treasury yields scale 14-month peak
* Palladium jumps to more than one-year high

(Updates prices)
By Asha Sistla
March 18 (Reuters) - Gold slid 1% on Thursday, retreating
from a more than two-week high as rising U.S. Treasury yields
and a stronger dollar dented demand for the safe-haven metal.
Spot gold XAU= was down 1% at $1,726.26 an ounce by 1232
GMT after touching its highest since March 1 at $1,755.25.
U.S. gold futures GCv1 , meanwhile, were steady at
$1,726.50.
"The main headwind for gold right now is surging bond
yields. This is also a sign that the bond market is losing trust
and confidence in the Federal Reserve being able and willing to
fight inflation," said Commerzbank analyst Carsten Fritsch.
"But this, in turn, will also be very bullish for gold in
the long run."
The benchmark U.S. 10-year Treasury yield US10YT=RR rose
to 1.74% for the first time since January 2020, while the dollar
gained 0.3% against its rivals. US/ USD/
The U.S. Federal Reserve on Wednesday said the U.S. economy
was on track for its fastest expansion in nearly 40 years, but
the central bank pledged to keep its ultra-easy monetary policy
stance despite expected inflationary pressure. Gold is seen as a hedge against inflation, but rising
Treasury yields have challenged that status as they translate
into a higher opportunity cost of holding bullion.
"(The Fed) is getting more optimistic and that doesn't bode
well for gold and suggests that the trend lower is likely to
continue," said DailyFX currency strategist Ilya Spivak.
Auto-catalyst metal palladium XPD= climbed 4.5% to
$2,684.72 an ounce, extending its rally to the highest level
since February 2020.
Russia's Nornickel Nickel GMKN.MM , the top producer of
palladium, cut its output forecast on Tuesday because of
waterlogging at two Siberian mines. Silver XAG= dropped 0.8% to $26.12 an ounce and platinum
XPT= eased 0.1% to $1,212.41.