PRECIOUS-Gold gains as softer U.S. dollar, yields lift appeal

* Focus turns to ECB policy meeting on Thursday
* 10-year U.S. Treasury yields drop below 1.6%

(Updates prices)
By Brijesh Patel
April 21 (Reuters) - Gold prices rose on Wednesday, hovering
near a seven-week high hit earlier this week, as a softer dollar
and a retreat in U.S. Treasury yields lifted demand for the
safe-haven metal.
Spot gold XAU= was up 0.5% to $1,786.80 per ounce at 0657
GMT, after hitting $1,789.77 on Monday, its highest since Feb.
25.
U.S. gold futures GCv1 gained 0.5% to $1,786.90 per ounce.
"The U.S. dollar had edged lower this morning, supporting
prices, with gold's upward momentum from overnight continuing in
Asia," OANDA senior market analyst Jeffrey Halley said.
"Providing that U.S. 10-year yields remain softer, gold
appears to be gathering strength for a test of the 100-day
moving average at $1,802 an ounce in the days ahead."
The dollar index .DXY was languishing near a seven-week
low against its rivals, while benchmark 10-year U.S. Treasury
yields US10YT=RR dropped below 1.6%, reducing the opportunity
cost of holding non-yielding bullion. US/ USD/
Market participants now await the European Central Bank
meeting on Thursday for further clarity about stimulus plans for
the bloc. The U.S. Federal Reserve policy meeting is due next
week.
Gold is seen as a hedge against inflation that could follow
stimulus measures, but higher Treasury yields have dulled some
of the appeal of the non-yielding commodity this year.
"In the big picture, gold prices are moving higher from lows
established below $1,700 as the dollar remains weak and U.S.
yields declined in the face of a new driver - geopolitics,"
Avtar Sandu, senior commodities manager at Phillip Futures, said
in a note.
"With a delay due to the accelerating spread of the
coronavirus, gold traders would expect the Fed and other central
bankers to remain dovish." Among other precious metals, silver XAG= was up 0.9% at
$26.09 per ounce. Palladium XPD= gained 0.9% to $2,786.94,
while platinum XPT= rose 1% to $1,199.03.