Gold prices eased off their 7 week high as US yields again took a northward journey. This was even as the dollar continued to remained low against the basket of currencies.
On the MCX, gold contract for June delivery was down by Rs. 100 to Rs. 47293 per 10 gm.
In the international markets spot gold went lower by 0.2 percent to $1766 per ounce by 0245 GMT. "Gold came off yesterday's high against a backdrop of rising yields. But, the rise in yields didn't echo into the dollar. The greenback's soggy performance is supportive for gold," said DailyFX currency strategist Ilya Spivak.
The yield has again gone past levels of 1.6 percent, increasing the opportunity cost of holding non-yielding bullion.
Benchmark 10-year U.S. Treasury yields rose above 1.6% after hitting a five-week low last week, increasing the opportunity cost of holding non-yielding bullion.
Gold is seen as a hedge against inflaton and also stimulus measures would support gold price rise. Nonetheless, climb in US treasury yield to some extent has taken sheen out of the precious yellow metal.