PRECIOUS-Gold prices dip as bond yields strengthen ahead of Fed meeting

       * Federal Open Market Committee due to meet May 3-4
    * Fed will continue to beat the hawkish drum - analyst
    * 10-year yields climb towards recent multi-year peaks

 (Updates prices)
    By Bharat Gautam
    May 2 (Reuters) - Gold prices fell on Monday as elevated
U.S. Treasury yields pressured demand for zero-yield bullion,
ahead of a widely expected big interest rate hike by the Federal
Reserve to contain broadening inflationary pressures.
    Spot gold        was down 0.6% at $1,884.50 per ounce, as of
0536 GMT. U.S. gold futures        dropped 1.5% to $1,883.30.
    The market is concerned that the Fed could be quite hawkish,
pricing in a 50 basis point hike, and it could be 75 basis
points in July, said Stephen Innes, managing partner at SPI
Asset Management.
    The U.S. central bank's Federal Open Market Committee is
scheduled to begin its two-day meeting on May 3 and announce its
decision the next day.
    U.S. Fed policymakers look set to deliver a series of
aggressive rate hikes at least until the summer to deal with
rapid inflation and surging labour costs, even as two reports
released on Friday showed tentative signs that both may be
cresting.
    The Fed is still behind, and has constantly tried to keep up
with these expectations, so there's a good chance they are
looking at current inflation metrics, and "are going to continue
to beat the hawkish drum," Innes said.
    Benchmark 10-year U.S. Treasury yields rose towards recent
multi-year peaks, pressuring demand for gold.
    Higher short-term U.S. interest rates and bond yields tend
to increase the opportunity cost of holding bullion, which
yields nothing. Bullion is also seen as a safe store of value
during times of economic and political crises.
    Around 100 civilians evacuated from the ruined Azovstal
steelworks in Mariupol were due to arrive in a Ukrainian-held
city on Monday, Ukrainian President Volodymyr Zelenskiy said,
after U.S. Speaker Nancy Pelosi made a surprise visit to Kyiv.

    Spot silver        fell 0.6% to $22.61 per ounce, platinum
       dipped 0.4% to $927.08, and palladium        slid 2.8% to
$2,255.60.

 (Reporting by Bharat Govind Gautam in Bengaluru; Editing by
Sherry Jacob-Phillips)

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