PRECIOUS-Gold gains on lower U.S. yields even as dollar holds firm

(Adds analyst comment, updates prices)
* Dollar index at over two-week high
* Treasury yields slip to lowest since March 16
* Powell comforts markets about inflation worries

By Asha Sistla
March 24 (Reuters) - Gold prices rose on Wednesday as U.S.
Treasury yields held close to a one-week low, with bullion
shrugging off strength in the dollar following Federal Reserve
Chairman Jerome Powell's reassurance that inflation would not
spiral out of control.
Spot gold XAU= was up 0.2% at $1,730.25 per ounce by 0640
GMT. U.S. gold futures GCv1 were up 0.2% at $1,728.60 per
ounce.
Lower yields "are helping gold stay up, and there is a tough
fight going on between bulls and bears around these levels,"
said Jigar Trivedi, commodities analyst at Mumbai-based broker
Anand Rathi Shares.
"The rising dollar is offsetting the dip in the 10-year bond
yields," Trivedi added.
Treasury yields slipped to the lowest since March 16, while
the dollar jumped above a two-week high after Powell told U.S
lawmakers on Tuesday he expected inflation to rise over the year
but it would be "neither particularly large nor persistent."
USD/ US/
Treasury Secretary Janet Yellen said the U.S. economy
remains at risk as she fielded lawmakers' questions about
possible infrastructure and tax increase plans under
consideration. "The possibility of higher taxes, whether corporate or
individual, tends to raise the demand for bullion as a safe
haven," James Steel, chief precious metals analyst at HSBC wrote
in a note.
Both Yellen and Powell are also scheduled to testify to the
Senate Banking Panel on Wednesday.
"Gold has support nearby at $1,720, and if the U.S. dollar
strengthens in Asia and Europe, it could test that level,
prompting some stop-loss selling," said OANDA senior market
analyst Jeffrey Halley.
Palladium XPD= was flat at $2,602.70, silver XAG= was up
0.2% at $25.12 and platinum XPT= was down 0.2% at $1,166.31.
"Palladium is slightly on the defensive as near-term
supplies of the metal appear adequate despite temporary PGM
(Platinum Group Metals) mine closures," HSBC's Steel wrote.