PRECIOUS-Gold slides 2% to near 3-week trough as U.S. yields surge

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* Benchmark U.S. 10-year Treasury yields hit 14-month high
* Dollar index jumps to four-month peak
* Palladium could remain above $2,100 in the next 2 years-
analyst
* Crucial support for gold at $1,670/oz -analyst

By Shreyansi Singh
March 30 (Reuters) - Gold prices slipped nearly 2% on
Tuesday as a firmer dollar, higher Treasury yields and hopes for
a faster U.S. economic recovery dampened demand for safe-haven
bullion.
Spot gold XAU= was down 1.6% at $1,684.64 per ounce by
1:57 p.m EDT (1757 GMT). Earlier in the session, bullion fell
about 2% to its lowest since March 8 at $1,678.40. U.S. gold
futures GCv1 settled 1.7% down at $1,686.
Benchmark U.S. 10-year Treasury yields US10YT=RR rose to a
14-month peak, bolstered by hopes of stronger growth and
inflation ahead of U.S. President Joe Biden's
multitrillion-dollar infrastructure plan. US/
"The short-term drivers just appear to be becoming very
bearish for gold," said Edward Moya, senior market analyst at
OANDA, pinning gold's recent weakness on a firmer dollar and
higher yields.
While gold is likely to see some pressure in the short-term,
investors pricing in inflationary concerns could "eventually
trigger a frenzy of gold buying," Moya added.
The dollar index .DXY jumped to a more than four-month
high, making greenback-denominated gold more expensive for
holders of other currencies. USD/
Higher U.S. Treasury yields have threatened gold's appeal as
an inflation hedge as they increase the opportunity cost of
holding bullion, which pays no interest. US/
Meanwhile, palladium XPD= gained 1.8% to $2,574.26, having
earlier risen over 3% after sliding 5.5% in the previous
session.
Palladium will likely remain a tight market in the coming
years, keeping prices elevated well above $2,100 for at least
the next two years, said Jeffrey Christian, managing partner of
CPM Group.
But palladium's widening premium over platinum could drive
some autocatalyst demand substitution from palladium to platinum
and limit palladium's gains slightly, he added.
Both platinum and palladium are used in automobile
catalytic converters to limit exhaust emissions.
Silver XAG= fell 2.5% to $24.05 an ounce and platinum
XPT= was down 1.8% at $1,154.89.