PRECIOUS-Gold scales one-week high as U.S. yields, dollar ease

* $1.9 trillion U.S. COVID-19 bill wins final approval
* European Central Bank policy meeting eyed later in day
* Greater upside in other assets than in gold - analyst

(Updates prices)
By Sumita Layek
March 11 (Reuters) - Gold prices rose on Thursday to their
highest level in more than a week, after softer U.S. inflation
data halted an advance in Treasury yields and the dollar.
Spot gold XAU= gained 0.5% to $1,734.36 per ounce by 0715
GMT, after hitting its highest since March 3 at $1,735.48
earlier. U.S. gold futures GCv1 climbed 0.5% to $1,730.40.
"We got a little bit of a shot in the arm for gold, when the
CPI (consumer price index) number came in a little bit softer...
the dollar surge abated and yields stopped climbing, that's been
a positive driver for gold," said IG Market analyst Kyle Rodda.
Benchmark U.S. yields US10YT=RR remained subdued, while
the dollar eased after the CPI data on Wednesday did not change
expectations that inflation will exceed the Federal Reserve's 2%
target. Recent surge in yields has threatened gold's status as a
hedge against inflation, since it translates into higher
opportunity cost of holding bullion, which pays no return.
"Gold's trend is still to the downside. We continue to see
real yields pushing higher, driven by the optimism around
economic recovery, as well as expectations that at some point...
central banks will have to unwind policy support," Rodda
cautioned.
Investors are now awaiting a European Central Bank policy
meeting later in the day to see if policymakers will take any
action to reign in rising yields. The $1.9 trillion U.S. COVID-19 relief bill was finally
approved on Wednesday and is expected to supercharge the
economic recovery. "Sentiment for gold is still being driven by debt markets,
in particular the 10-year U.S. yields," said Michael Langford,
director at corporate advisory AirGuide, adding there was
greater upside in other assets like copper and small-cap
equities than in gold in the short term. Silver XAG= rose 0.5% to $26.29 an ounce. Palladium XPD=
climbed 0.3% to $2,312.34, while platinum XPT= gained 1.2% to
$1,216.71.