PRECIOUS-Gold slips as stronger dollar prevails over easing yields

(Adds comment, updates prices)
* Dollar index hits 2-week high
* Gold could draw support from rising COVID-19 cases-
analyst

By Nakul Iyer
March 23 (Reuters) - Gold prices slipped on Tuesday as the
dollar's rally to a two-week peak offset a dip in U.S Treasury
yields.
Spot gold XAU= fell 0.7% to $1,726.76 per ounce by 2:31
P.M EDT (1831 GMT). U.S. gold futures GCv1 settled 0.8% lower
at $1,725.10.
"We see a tenuous gold market on the premise that depending
on the given day we see forces pushing or pulling in either
direction," said David Meger, director of metals trading at High
Ridge Futures, adding a gaining dollar, amid hopes of an
economic recovery, was keeping bullion pressured.
The dollar .DXY touched its highest since March 9, while
U.S. benchmark Treasury yields dipped. A stronger greenback
raises the cost of holding bullion for other currency holders.
USD/
"Gold has all to do to break out of its current downward
trend, especially with the recovering dollar standing in its
way," said FXTM market analyst Han Tan.
"Gold has to first break above its 50-day simple moving
average in order to send a favourable signal to bullion bulls."
However, the Federal Reserve's signaling of low-interest
rates and the likelihood for further fiscal stimulus were
capping the metal's losses and gold could draw further support
from a potential resurgence in COVID-19 cases and waning
economic optimism that would hurt yields, Meger added.
Fed Chair Jerome Powell told U.S lawmakers on Tuesday he
expected inflation to rise over the year but it would be
"neither particularly large nor persistent." "Right now they (the Fed) would rather err on the side of
letting inflation overheat before they do anything," said Frank
J. Cholly, senior market strategist at RJO Futures. "They don't
want to slam the breaks on an economy that's really beginning to
take off" and that should support gold prices, he added.
Among other precious metals, silver XAG= fell 2.7% to
$25.08 and platinum XPT= dropped 1.1% to $1,170.01, while
palladium XPD= rose 0.2% to $2,620.51.