Gold prices climbed on Tuesday as concerns over the economic damage from surging Delta coronavirus cases, and a dip in U.S. Treasury yields boosted the safe-haven metal's appeal.

Spot gold rose 0.6% to $1,823.06 per ounce by 1254 GMT, having hit a low of $1,794.06 in the previous session. U.S. gold futures GCv1 gained 0.8% to $1,824.20.

"The great problem currently is the fear about the economic impact of the Delta variant of the coronavirus and after Japan took severe measures concerning the Olympic Games, markets got more and more nervous, resulting in a flight into safe havens," said Quantitative Commodity Research analyst Peter Fertig.

A surge in coronavirus cases across the United States and other countries has sent higher-risk assets such as equities and oil tumbling.

Tokyo Olympics organisers on Sunday reported the first COVID-19 cases among competitors in the athletes' village.

Gold, seen as a safe store of value, tends to benefit during times of political and financial uncertainty.

"Rapidly rising cases in Europe as well as in the United States prompted market participants to reduce risks in their portfolios," said Julius Baer analyst Carsten Menke.

Benchmark 10-year Treasury yields touched a more than five-month low, reducing the opportunity cost of holding non-interest bearing gold.

A firm U.S. dollar however challenged gold's appeal, as the currency scaled a 3-1/2-month high, making gold more expensive for other currency holders. 

Commerzbank said in a note that gold's recent weakness would likely only be temporary and it would recover noticeably as soon as the headwind of an appreciating dollar abated.

Elsewhere, platinum fell 0.7%, to $1,067.49 per ounce, palladium edged 0.1% down to $2,594.31, and silver eased 0.4% to $25.12.

(Reporting by Arundhati Sarkar in Bengaluru Editing by Mark Potter, Jane Merriman and David Evans) ((Arundhati.Sarkar@thomsonreuters.com; twitter.com/Arundhati_05; +1 646 223 8780 Ext: 2776))