NEW YORK: Gold pared some losses after dipping more than 1% earlier on Wednesday, helped by dovish comments from Federal Reserve Chair Jerome Powell, but bullion struggled for traction as elevated US Treasury yields dampened its allure as an inflation hedge.

Spot gold was down 0.3% at $1,800.27 per ounce by 12:44 p.m. EST (1744 GMT), after dropping as much as 1.2% earlier in the session.

US gold futures eased 0.3% to $1,800.

“Rising bond yields continue to weigh on the gold market. Gold has not found any path to a sustainable recovery even with talks about additional stimulus measures,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

US benchmark 10-year Treasury yields touched 1.4% for first time since February 2020. Rising yields tend to hurt bullion’s appeal as an inflation hedge since they increase the opportunity cost of holding the metal.

Powell on Wednesday reiterated that US interest rates will remain low and the Fed will keep buying bonds to support the US economy.

In his testimony before the US Senate on Tuesday, Powell said monetary policy still needed to be accommodative, with economic recovery “uneven and far from complete.”

“Over the last two days a very dovish and hence risk-friendly Powell has cheered the stock market which is bearish for USD and as such has given gold a little breathing space,” said Tai Wong, a trader at investment bank BMO in New York.

The dollar index was hovering near a more than one-month low against its rivals.

Investors kept a close watch on developments over a $1.9 trillion US coronavirus relief package, which could contribute to a speedy economic recovery but at the cost of rising inflation.

Elsewhere, silver rose 0.5% to $27.75 an ounce, platinum climbed 1.9% to $1,260.26. Palladium jumped 3.5% to $2,433.91 an ounce, its highest level since Jan. 15.