PRECIOUS-Gold gains as U.S. Treasury yields slip ahead of Fed meeting

* Fed's two-day meeting starts later on Tuesday
* Investors eye U.S. retail sales data at 1230 GMT

(Adds comments; updates prices)
By Diptendu Lahiri
March 16 (Reuters) - Gold prices firmed on Tuesday as U.S.
Treasury yields eased, while investors awaited a U.S. Federal
Reserve meeting which is likely to tackle concerns over rising
inflation.
Spot gold XAU= rose 0.2% to $1,735.76 per ounce by 0600
GMT, while U.S. gold futures GCv1 were up 0.4% to $1,735.90.
"At the moment, gold is gaining on declining yields and
investors are taking the opportunity to buy gold at a still
lower price, betting on long-term uncertainties like lower
interest rates and higher inflation," said Kunal Shah, head of
research at Nirmal Bang Commodities in Mumbai.
Longer-term U.S. Treasury yields tumbled and the yield curve
flattened on Monday ahead of the Fed's two-day meeting starting
later in the day. US/
Fed policymakers, in the upcoming FOMC meeting, are set to
forecast that the U.S. economy will accelerate at the quickest
rate in decades in 2021 as the COVID-19 vaccine initiative ramps
up and a $1.9 trillion relief package is dispersed among
households. "The Fed may address rising inflation concerns and even
consider to push forward asset purchasing to compensate for the
rising yields and that would be very positive for gold prices,"
said DailyFX strategist Margaret Yang.
Investors are also eyeing the U.S. Commerce Department's
February retail sales data due on Tuesday, following January's
5.3% surge.
"The optimism around a faster recovery in economic
activities has dulled the appetite for safe-haven assets,"
Michael McCarthy, chief market strategist at CMC Markets said,
adding that unless gold breaks the $1,740 resistance level in
the short-term, it won't have a substantial upside.
Gold prices slid to their lowest in nine months last week,
as a stronger dollar and surging U.S. Treasury yields dented
demand for the non-yielding asset.
In other metals, silver XAG= was little changed at $26.27,
platinum XPT= was up 0.6% to $1,220.01 and palladium XPD=
rose 0.5% to $2,399.12.