Gold rose up to 1 percent on Tuesday as the dollar and European shares suffered from a sell-off in global bond markets, although higher real yields kept prices under $1,200 an ounce. Spot gold touched a session high of $1,196.60 an ounce and was up 0.8 percent at $1,193.35 by 3:00 pm EDT (1900 GMT), while US gold futures for June delivery settled up $9.40 at $1,192.40 an ounce.
The dollar index, which measures the US currency against a basket of major peers, fell 0.5 percent and helped support gold prices. US 10-year yields, which have been boosted in recent weeks by higher German Bunds, rose to a six-month high above 2.3 percent. Rising yields usually weigh on gold, as they increase the opportunity cost of holding non-yielding bullion. While that pressure has been offset by weakness in other markets, gold remains vulnerable to a further jump in yields.
Gold was helped by a sharp decline in European shares, as it is usually seen as an hedge against risk. "Today it is two to one in favour of rising gold - weak US dollar and weak stocks versus rising bond yields," Commerzbank analyst Carsten Fritsch said. Silver rose 1.6 percent to $16.55 an ounce, platinum 0.7 percent to $1,128.99 an ounce and palladium 0.9 percent to $784.60 an ounce.