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Gold sinks to 2-week low as rising bond yields support dollar

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Spot gold was down about 0.1 per cent at US$1,334.11 per ounce after earlier touching its lowest since April 10 at US$1,331.70. US gold futures fell 0.2 per cent to US$1,336.30 per ounce.

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Gold prices slipped to their lowest level in nearly two weeks in range-bound trade on Monday, as the dollar rose on the back of climbing US Treasury yields and as global political concerns eased.

Spot gold was down about 0.1 per cent at US$1,334.11 per ounce at 12.19pm (India time) after earlier touching its lowest since April 10 at US$1,331.70. US gold futures fell 0.2 per cent to US$1,336.30 per ounce.

"Gold prices dropped back to the levels of around a week ago, with easing geopolitical tensions, the stronger USD and gains in US rates affecting the market," ANZ analysts said in a note.

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The dollar traded near a two-week high against a basket of major currencies on Monday, bolstered by rising US bond yields and as concerns eased over global political risks after North Korea said it would suspend nuclear and missile tests, scrap its nuclear test site and pursue economic growth and peace.

"We're on another high for the year for dollar yields and it's not boding well for gold," said a Hong Kong-based trader.

Yields on benchmark 10-year Treasuries climbed to the highest level since January 2014 on Friday. Higher US bond yields tend to boost the dollar and weigh on greenback-denominated gold.

Expectations that the Federal Reserve would raise interest rates three more times in 2018 after strong US data last week, were also supporting the dollar.

Gold prices were slightly supported by the arbitrage in Asia and as it held its 50-day moving average around US$1,332 an ounce, the trader said.

"But I think Europe will look for the bigger picture which is dollar strength and I think they'll look to sell into this rally."

Speculators raised their net long positions in Comex gold by 5,382 contracts to 143,594 contracts in the week to April 17, US Commodity Futures Trading Commission data showed on Friday.

Spot gold may test support at US$1,326 per ounce, following its failure to break resistance at US$1,354, said Reuters technical analyst Wang Tao.

Among other precious metals, spot silver fell 0.1 per cent to US$17.09 per ounce. Platinum was about 0.5 per cent higher at US$926.70 an ounce, while palladium rose 0.1 per cent to US$1,031.22 an ounce. REUTERS