The U.S. dollar traded close to its highest since the start of the year, making gold more expensive for holders in other currencies.
Since August, the central bank has tried to keep the 10-year yields below 6 per cent.
Bond dealers said the market wanted the RBI to offer them higher coupon for the switch, as the source security is maturing just next month.
India's benchmark 10-year bond yield fell as much as 11 bps to 6.42% on FM Sitharaman's comments
The 10-year yield has been on an upward move for a while now, but it wasn't expected to reach the level of 2.85%, anytime soon