PRECIOUS-Gold slips as rallying U.S. yields dull appeal

(Updates prices)
* U.S. Treasury yields hold above 1%
* Dollar is going to depreciate all through 2021- analyst
* Interactive graphic tracking global spread of coronavirus:
https://tmsnrt.rs/3mvcUoa

By Asha Sistla
Jan 7 (Reuters) - Gold prices eased on Thursday as a surge
in U.S. Treasury yields and firm dollar dampened demand for
bullion, although losses were limited by hopes for more fiscal
stimulus after Democrats won control of the U.S. Senate.
Spot gold XAU= was down 0.2% to $1,915.21 per ounce by
1223 GMT. U.S. gold futures GCv1 were up 0.5% to $1,918.30.
Prices slipped as much as 2.5% after scaling a high since
Nov. 9 on Wednesday, as 10-year U.S. Treasury yields US10YT=RR
jumped above 1% for the first time since March.
"I see this as a consolidation after a very strong start to
the year. The market has caught a bit of a cold because of the
(bond yields) rally and they are rallying for the reasons that
we're actually seeing gold continue to be supported, so it's a
bit of a catch 22 right now," said Saxo Bank analyst Ole Hansen.
"The U.S. economy is nowhere near any level where we can
start to talk about a full recovery and that will require
additional stimulus or spending which will potentially drive
yields higher, but it will also drive inflation expectations
higher."
A Democrat victory in the U.S. Senate runoffs fueled
inflation expectations as investors hoped for more fiscal
stimulus, while the U.S. Congress certified President-elect Joe
Biden's win. Bullion is seen as a hedge against inflation and currency
debasement that could result from large stimulus measures.
The dollar index rebounded from a multi-year low as yields
gained over 1%. A stronger dollar makes gold expensive for
holders of other currencies. US/ USD/
"The dollar is going to depreciate all through 2021, U.S.
yields may move slightly higher from here, but they're not going
to run away to the top, in that environment gold should
flourish," said Jeffrey Halley, a senior market analyst at
OANDA.
Silver XAG= fell 0.8% to $27.09 an ounce. Platinum XPT=
was down 0.6% to $1,094.85, and palladium XPD= slipped 1.1% to
$2,411.36.