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 of more fiscal stimulus after Democrats won control of the U.S. Senate.

Spot gold was down 0.4% to $1,911.31 per ounce at 1030 GMT. U.S. gold futures were up 0.4% to $1,916.60.

Prices declined as much as 2.5% after scaling a high since Nov. 9 on Wednesday, as 10-year U.S. Treasury yields 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."

U.S. inflation expectations rose as investors hoped for more fiscal stimulus with the Democrats' victory in Georgia's two runoff elections for control of the U.S. Senate. 

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 helped by yields rising above 1%. A stronger dollar makes gold expensive for holders of other currencies. 

"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 fell 1.1% to $27.00 an ounce. Platinum was down 0.8% to $1,092.65, and palladium XPD= slipped 1.4% to $2,404.08.

(Reporting by Asha Sistla and Sumita Layek in Bengaluru. Editing by Mark Potter) ((Asha.Sistla@thomsonreuters.com; If within U.S. +1 646 223 8780; outside U.S. +91 80 6182 2808; Reuters Messaging: Reuters Messaging: asha.sistla.thomsonreuters.com@reuters.net))