PRECIOUS-Gold slips as U.S. bond yields and equities dull its appeal

* Fed officials keep emphasis on monetary easing
* U.S. Senate to debate $1.9 trillion stimulus package this
week

(Updates prices)
By K. Sathya Narayanan
March 3 (Reuters) - Gold prices fell on Wednesday as U.S.
Treasury yields resumed their advance and global equities also
firmed, reducing the appeal of safe-haven bullion.
Spot gold XAU= fell 0.8% to $1,725.00 per ounce by 1251
GMT, having dropped to its lowest since June 15 at $1,706.70 on
Tuesday. U.S. gold futures GCv1 were down 0.6% to $1,724.00.
The main driver for gold remains U.S. 10 year Treasury
yields, said analyst Xiao Fu at Bank of China International.
"It seems like the broad equity market is stable, with a
moderate risk-on sentiment, so that (also) diminishes safe-haven
demand for gold," she added.
Benchmark U.S. 10-year Treasury yields US10YT=RR edged
higher but remained short of a one-year peak reached last week,
while global equities and U.S. dollar .DXY gained.
US/ MKTS/GLOB USD/
Though gold is seen as an hedge against rising inflation,
higher yields have threatened that status because they increase
the opportunity cost of holding non-yielding bullion.
"There's a clear trend for gold to the downside, and as long
as fiscal stimulus keeps getting pumped into the U.S. economy
and the U.S. Federal Reserve remains reticent about doing
something to quash yields, gold prices will struggle," said IG
Market analyst Kyle Rodda.
Progress on the $1.9 trillion U.S. stimulus bill is being
watched closely by investors, with the Senate due to debate the
legislation this week. "We anticipate recent headwinds to intensify again into the
second half of this year, particularly as greater U.S. stimulus
raises the prospect of an earlier than planned Fed rate hike,"
UBS analysts wrote in a note. Fed officials, however, maintain that they will keep
monetary easing in place despite a potential bout of inflation
this spring. In other precious metals, silver XAG= fell 0.7% to $26.56
an ounce, while palladium XPD= shed 0.5% to $2,351.18 and
platinum XPT= eased 0.2% to $1,201.74.