PRECIOUS-Gold slips as dollar strength offsets Europe lockdown worries

(Updates prices)
* Dollar hits fresh four-month high
* Silver drops to over two-month low
* European stocks slip in early trading

By Brijesh Patel
March 25 (Reuters) - Gold prices eased on Thursday as a
stronger U.S. dollar overshadowed support from lower bond yields
and worries that lockdowns across Europe would take a toll on
the pace of economic recovery.
The dollar index .DXY rose to a four-month high against
its rivals, making gold more expensive for holders of other
currencies. USD/
"We are in a rough patch in terms of risk appetite in
general; that could add some support to gold market, but right
now the focus is on the dollar," said Saxo Bank analyst Ole
Hansen.
"Gold prices need to break above $1,765/oz level to attract
renewed momentum."
Spot gold XAU= was down 0.3% at $1,728.58 per ounce by
1156 GMT. U.S. gold futures GCv1 were down 0.3% at $1,728.30
per ounce.
Sentiment in wider financial markets remained weak as
investors grew wary about the economic outlook following a new
round of coronavirus restrictions in the euro zone and potential
U.S. tax hikes. .EU MKTS/GLOB
"With virus cases rising and lockdowns in Europe, the road
to recovery might take a little longer, which is leading to
lower yields," Hansen said.
Offering some respite to gold, U.S. Treasury yields dipped,
with the market appearing to stabilise after benchmark yields
reached one-year highs last week. US/
Lower yields reduce the opportunity cost of holding
non-interest bearing gold.
"Bullion could see further upside traction if U.S. bond
yields stay sluggish, especially in this risk-averse environment
with U.S.-Sino tension starting to bubble again," said Stephen
Innes, chief global market strategist at financial services firm
Axi, in a note.
Among other precious metals, silver XAG= dropped 1.6% to
$24.69 per ounce, having fallen to a more than two-month low
earlier in the session.
Palladium XPD= rose 0.3% to $2,642.94 per ounce, while
platinum XPT= slipped 0.5% to $1,161.33.