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Gold reclaims $1,800 level as U.S. bond yields drop

Kitco News

* Gold jumps over 1% to a near three-week high

* Silver climbs to highest since June 17

* U.S. 10-year Treasury yield drops to lowest since June 21 (Recasts, adds comments, updates prices)

July 6 (Reuters) - Gold prices bounced past the key $1,800 level on Tuesday as U.S. bond yields held near a two-week low, with investors watching for the Federal Reserve's minutes from its last policy meeting to gauge the outlook for U.S. interest rates.

Spot gold rose 1% to $1,808.81 per ounce by 09:46 a.m. EDT (1346 GMT), after jumping to its highest since June 17 at $1,814.78. U.S. gold futures climbed 1.5% to $1,809.30.

"What we've seen in the last few days is central banks are dismissing the idea of raising interest rates prematurely," said Fawad Razaqzada, analyst with ThinkMarkets.

Investors are realizing that monetary policy will remain historically very loose and that's one of the reasons why we're seeing bond yields go down, which is helping stabilize gold prices after falling sharply in June, Razaqzada said.

The focus this week is on minutes from the Fed's latest meeting due out on Wednesday, after a hawkish tilt from the U.S. central bank last month in which policymakers projected a start to rate hikes in 2023, sending gold prices below the $1,800 level.

Gold regained some footing after data on Friday showed U.S. companies in June hired the most workers in 10 months but the unemployment rate ticked higher.

"Friday's U.S. non-farm payroll data appeared to ease expectations of an earlier move by the U.S. central bank," said Sophie Griffiths, market analyst at OANDA.

"The question remains, will the minutes to the latest Fed meeting quickly reverse that thinking?"

Higher interest rates increase the opportunity cost of holding bullion, which pays no interest.

In other metals, silver was up 0.1% at $26.47 per ounce, having jumped to the highest since June 17 at $26.76 per ounce.

Platinum gained 0.6% to $1,103.49, and palladium added 1.3% to $2,850.24. (Reporting by Swati Verma and Eileen Soreng in Bengaluru; Editing by Andrea Ricci)

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