Gold slid 1% on Thursday, retreating from a more than two-week high as rising U.S. Treasury yields and a stronger dollar dented demand for the safe-haven metal.
Spot gold was down 0.9% to $1,728.51 an ounce by 1139 GMT after touching its highest since March 1 at $1,755.25 in the session.
Meanwhile, U.S. gold futures were up 0.2% at $1,730.90 per ounce.
"The main headwind for gold right now is surging bond yields. This is also a sign that the bond market is losing trust and confidence in the Federal Reserve being able and willing to fight inflation," said Commerzbank analyst Carsten Fritsch.
"But, this in turn will also be very bullish for gold in the long run," he added.
The benchmark U.S. 10-year Treasury yield rose to 1.74% for the first time since January 2020, while the dollar gained 0.3% against its rivals.
The U.S. Federal Reserve on Wednesday said the U.S. economy was on track for its fastest expansion in nearly 40 years, but the central bank pledged to keep its ultra-easy monetary policy stance despite expected inflationary pressure.
Gold is seen as a hedge against inflation, but rising Treasury yields have challenged that status as they translate into a higher opportunity cost of holding bullion.
"(The Fed) is getting more optimistic and that doesn't bode well for gold and suggests that the trend lower is likely to continue," said DailyFX currency strategist Ilya Spivak.
Auto-catalyst metal palladium climbed 2.4% to $2,631.09 per ounce, extending its rally to the highest level since March 2 last year.
Russia's Nornickel Nickel, the top producer of palladium, cut its output forecast on Tuesday because of waterlogging at two Siberian mines.
Silver dropped 0.7% to $26.15 an ounce and platinum eased 0.5% at $1,207.47.
(Reporting by Asha Sistla and Brijesh Patel in Bengaluru; Editing by David Goodman and Barbara Lewis) ((Asha.Sistla@thomsonreuters.com; If within U.S. +1 646 223 8780; outside U.S. +91 80 6182 2808; Reuters Messaging: Reuters Messaging: firstname.lastname@example.org))