 "Gold prices decline as US bond yields, dollar advance")
Gold inched lower on Wednesday after posting its biggest jump in two months in the previous session, as firmer U.S. Treasury yields and dollar eroded the metal's appeal.
Spot gold eased 0.1% to $1,714.55 per ounce by 0706 GMT, after rising more than 2% on Tuesday. U.S. gold futures fell 0.3% to $1,712.40.
"There's an element of corrective price action after a very spirited gold rebound in the preceding 24 hours. (And) gold has been falling largely against the backdrop of yields rising," said DailyFX currency strategist Ilya Spivak.
U.S. yields recovered on Wednesday, reducing the appeal of holding gold, while the dollar also bounced back.
A steady rise in bond yields makes holding gold less attractive as investors typically tend to gravitate toward assets that generate steady income in the form of interest or dividend.
The $1.9 trillion U.S. COVID-19 relief bill has cleared procedural vote in the House of Representatives and is expected to be considered and passed on Wednesday.
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A massive U.S stimulus, loose global monetary policy, widespread vaccine rollouts and reopening of economies are "potentially very inflationary and might force the Federal Reserve to tighten policy meaningfully sooner, which would be a really big headwind for gold," Spivak said.
Large global stimulus measures to combat the economic fallout of the pandemic have fanned worries of higher inflation and lifted bond yields.
The European Central Bank will discuss on Thursday the merits of intervening to bring yields down.
However, potential of physical demand recovery and U.S. stimulus are likely to restrict a major downside in gold, Hareesh V, head of commodity research at Geojit Financial Services, said in a note.Silver fell 0.6% to $25.74 an ounce. Palladium rose 0.5% to $2,308.79, while platinum fell 0.9% to $1,157.81.
More platinum deficits loom this year after a record undersupply of almost a million ounces in 2020, the World Platinum Investment Council said.
(Reporting by Sumita Layek in Bengaluru; Editing by Rashmi Aich and Subhranshu Sahu)