Gold jumps over 1% as weaker dollar, U.S. yields enhance allure

Gold last traded at $1,779 an ounce. Silver at $26.49 an ounce.

NEWS SUMMARY: Precious metal prices eased Tuesday on profit-taking and a firmer dollar. U.S. stocks fell sharply following Treasury Secretary Yellen's comments that interest rates may have to rise to keep economy from overheating.

CNBC--"Gold prices jumped more than 1% on Monday, pulling along other precious metals with it, supported by a retreat in the dollar and U.S. Treasury yields....

'A combination of bond yields remaining tame, the dollar under pressure, the amount of fiscal and monetary stimulus that we have in this market ... all of those factors continue to drive gold and silver prices higher,' said David Meger, director of metals trading at High Ridge Futures.

'We are in this more inflationary environment and the fact that we've seen as much stimulus ... it's understandable to expect commodity prices in that environment to do quite well.' The dollar index slipped 0.4%, making gold more affordable for holders of other currencies, while benchmark U.S.

10-year Treasury yields also retreated, reducing the opportunity cost of holding non-interest bearing gold. Gold also found support from data showing U.S. manufacturing activity grew at a slower pace in April....

Strong economic data can also push gold higher as it means inflation will go higher, said Michael Matousek, head trader at U.S. Global Investors.

'We need to see gold get above the $1,800 level and sustain it for a little bit, and then it could be off to the races for $2,000.'"