* U.S. 10-year yields at five-month lows
* Reduced risk sentiment helping gold – analyst
* Dollar firms near multi-month highs (Recasts, adds comments, updates prices)
July 20 (Reuters) – Gold prices firmed on Tuesday as concerns over the economic damage from surging cases of the Delta coronavirus variant, and a dip in U.S. Treasury yields, lifted the metal from a one week low hit in the last session.
Spot gold was up 0.1% to $1,813.82 per ounce at 0902 GMT, having hit a low of $1,794.06 in the previous session. U.S. gold futures gained 0.2% to $1,813.50.
“The great problem currently is the fear about the economic impacts of the Delta variant of the coronavirus. And after Japan took severe measures concerning the Olympic Games, markets got more and more nervous … (resulting) in a flight into the safe havens,” said Quantitative Commodity Research analyst Peter Fertig.
A surge in coronavirus cases across the United States and other countries has dampened investor sentiment, sending riskier assets tumbling.
Meanwhile, Tokyo Olympics organisers on Sunday reported the first COVID-19 cases among competitors residing in the athletes’ village.
Gold, seen as a safe store of value, tends to benefit during times of political and financial uncertainty.
“Rapidly rising cases in Europe as well as in the United States prompted market participants to reduce risks in their portfolios,” said Julius Baer analyst Carsten Menke.
Benchmark 10-year Treasury yields hovered near five-month lows, reducing the opportunity cost of holding non-interest bearing gold.
A firm U.S. dollar challenged gold’s appeal, as the currency held firm near 3-1/2-month highs. A stronger dollar makes gold more expensive for other currency holders.
“If the U.S. dollar is strengthening because the yields are falling due to flight into the safe haven then the impact (on gold) … could be only slightly positive or even negative, as we have seen,” Fertig added.
Silver eased 0.4% to $25.11 per ounce, palladium rose 0.2% to $2,600.19 and platinum was flat at $1,075.00 per ounce. (Reporting by Arundhati Sarkar in Bengaluru Editing by Mark Potter)
