SINGAPORE: Gold prices erased early gains in Asian trade on Monday as hopes of a faster economic recovery got a boost from better-than-expected Chinese data, while a surge in US Treasury yields kept bullion under pressure.

Spot gold was down 0.1% to $1,724.10 per ounce by 0743 GMT, after rising as much as 0.4% earlier in the session. US gold futures were up 0.2% to $1,722.40.

The US yields are being the biggest headwind for gold and as long as they are bound to go higher that pressure on gold is likely to persist, said Harshal Barot, a senior research consultant for South Asia at Metals Focus.

The US dollar held firm, supported by a spike in benchmark Treasury yields to more than one-year highs on continued US economic optimism after a $1.9 trillion recovery package was signed into law last week.

“(Gold) bounced off really oversold levels, so we got some people just trying to buy the dip a little bit and take advantage of that,” said IG Market analyst Kyle Rodda, adding the gold market is technically bearish.

“But, the short-term fluctuations tend to be aligned with the US dollar.”

Encouraging growth data has also dampened the appeal of the safe-haven metal. Data earlier showed China’s industrial output growth quickened in January-February, beating expectations.

Gold prices fell to a nine-month low of $1,676.10 last week, pressured by accelerating bond yields, which increase the opportunity cost of holding non-yielding bullion.

Investors are now awaiting the US Federal Reserve meeting this week for direction on monetary policy.

“A strong show of dovish intent by (Fed Chair) Powell and team could send Treasury yields lower and lift gold prices higher,” Howie Lee, an economist at OCBC Bank wrote in a note.