PRECIOUS-Gold edges up on inflation bets as Fed meeting looms

* U.S. 10-year Treasury yields near to over one-year peak
* Gold could test resistance at $1,740/oz - analyst
* U.S. Fed's policy meeting on March 16-17 in focus

(Updates prices)
By Brijesh Patel
March 15 (Reuters) - Gold edged higher on Monday on
prospects of higher inflation following the approval of a $1.9
trillion U.S. stimulus bill, although elevated U.S. Treasury
yields capped bullion's gains ahead of a Federal Reserve
meeting.
Spot gold XAU= was up 0.2% at $1,729.61 per ounce by 1206
GMT. U.S. gold futures GCv1 rose 0.5% to $1,728.70.
"The strength shown by gold could be hinting that prices are
close to bottoming out on a longer-term basis, if gold's role as
an inflation hedge is creeping back into investors thoughts. We
will have a clearer picture by the end of the week," OANDA
senior market analyst Jeffrey Halley said.
"Overall, gold prices seem to be hanging in there despite
U.S. yield and dollar strength. Gold could test resistance at
$1,740."
President Joe Biden signed the $1.9 trillion stimulus bill
into law last week. Some investors view gold as a hedge against higher inflation
that could follow stimulus measures, but higher Treasury yields
dull some of the appeal of the non-yielding commodity.
Benchmark U.S. Treasury yields US10YT=RR were at their
highest in more than a year, while the dollar .DXY rose for a
second straight session. USD/ US/
Investors are now awaiting a two-day U.S. Federal Reserve
meeting this week for policymakers' remarks on a recent spike in
bond yields, fears about rising inflation and the economic
outlook. The Bank of England and Bank of Japan also have meetings on
Thursday and Friday this week.
"A strong show of dovish intent by (Fed Chair) Powell and
team could send Treasury yields lower and lift gold prices
higher," Howie Lee, an economist at OCBC Bank wrote in a note.
In other metals, silver XAG= gained 0.6% to $26.06 an
ounce. Palladium XPD= fell 0.7% to $2,355.93, while platinum
XPT= rose 0.7% to $1,212.85.