PRECIOUS-Gold breaks below $1,800 as dollar, yields gain

* Silver slips as much as 3.2%
* Spot gold hits more than two-month low at $1,784.76/oz
* Dollar at 2-month peak

(Updates prices)
By Eileen Soreng
Feb 4 (Reuters) - Gold dropped more than 2% on Thursday to
break below the key psychological $1,800 level as a rising
dollar and U.S. Treasury yields eroded bullion's appeal.
Spot gold XAU= fell 2.3% to $1,791.76 per ounce by 1:43
p.m. EST (1843 GMT), after touching a more than two-month low of
$1,784.76. U.S. gold futures GCv1 settled down 2.4% at
$1,791.20.
Silver XAG= dropped 2.3% to $26.26.
Silver prices have declined more than 13% since a
GameStop-style retail frenzy sent them to their highest in
nearly eight years at $30.03 on Monday. The steepening of the yield curve "ultimately means the cost
of holding gold across the curve is increasing. Gold could go
even lower and consolidate in response to ... the whole idea
that the U.S. and global economy are recovering," said Bart
Melek, head of commodity strategies at TD Securities.
However, silver could benefit from industrial demand, Melek
added.
Allaying some concerns over the health of the economy was a
drop in Americans filing new applications for unemployment
benefits last week. Making bullion more expensive for holders of other
currencies, the dollar .DXY scaled a more than two-month peak
while longer-term U.S. Treasury yields rose on anticipation of a
large pandemic relief package from Washington and a stabilizing
U.S. labor market. USD/ US/ While gold usually gains from more stimulus, since it is
considered a hedge against inflation from widespread stimulus
measures, higher yields challenge that status because they
increase the opportunity cost of holding non-yielding bullion.
"Growing expectations about a relatively quick end to the
pandemic are raising economic recovery hopes and with it the
likelihood of central banks reducing the current hyper-dovish
monetary stimulus," ActivTrades chief analyst Carlo Alberto De
Casa said in a note.
Among other precious metals, platinum XPT= fell 0.7% to
$1,093.52 per ounce and palladium XPD= rose 0.5% to $2,286.18.