In the international market, Gold pared some losses after dipping more than 1 per cent earlier on Wednesday, helped by dovish comments from Federal Reserve Chair Jerome Powell, but bullion struggled for traction as elevated US Treasury yields dampened its allure as an inflation hedge.
Spot gold was down 0.4 per cent at $1,798.10 per ounce by 02:30 p.m. EST (1930 GMT), after dropping as much as 1.2 per cent earlier in the session.
US gold futures settled down 0.4 per cent at $1,797.90.
"Rising bond yields continue to weigh on the gold market. Gold has not found any path to a sustainable recovery even with talks about additional stimulus measures," said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
US benchmark 10-year Treasury yields touched 1.4 per cent for first time since February 2020. Rising yields tend to hurt bullion's appeal as an inflation hedge since they increase the opportunity cost of holding the metal.
Powell on Wednesday reiterated that US interest rates will remain low and the Fed will keep buying bonds to support the US economy.
In his testimony before the US Senate on Tuesday, Powell said monetary policy still needed to be accommodative, with economic recovery "uneven and far from complete."
"Over the last two days a very dovish and hence risk-friendly Powell has cheered the stock market which is bearish for USD and as such has given gold a little breathing space," said Tai Wong, a trader at investment bank BMO in New York.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.