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PRECIOUS-Gold firms near 4-1/2-month peak on weaker U.S. dollar, yields

    May 26 (Reuters) - Gold prices held firm near a 4-1/2-month
high on Wednesday as a drop in U.S. Treasury yields and a weaker
dollar supported the safe-haven metal.
       
    FUNDAMENTALS
    * Spot gold        was steady at $1,899.11 per ounce by 0041
GMT, after hitting its highest since Jan.8 at $1,899.11 on
Tuesday.
    * U.S. gold futures        edged 0.1% higher to $1,899.60
per ounce.
    * The dollar index        was pinned near a 4-1/2-month low
against its rivals, making gold cheaper for other currency
holders.       
    * Benchmark U.S. Treasury yields fell to a two-week low of
1.56% overnight, reducing the opportunity cost of holding
non-interest bearing gold.      
    * U.S. consumer confidence hovered at a 14-month high in May
as optimism over jobs tempered concerns about rising inflation
and diminishing government financial support.             
    * The U.S. Federal Reserve can curb an outbreak of inflation
should it occur without throwing the recovery off track, Fed
vice chair Richard Clarida said on Tuesday.             
    * Fed policymakers have begun to acknowledge they are closer
to debating when to pull back some of their crisis support for
the U.S. economy, even as they say it is still needed to bolster
the recovery and employment.             
    * U.S. Senate Republicans plan to unveil a counteroffer to
President Joe Biden's $1.7 trillion infrastructure proposal on
Thursday, though one of their leaders said on Tuesday the two
sides remain far apart.             
    * The European Central Bank must keep its money taps fully
open, as the euro zone economy is still in the throes of the
COVID-19 pandemic despite progress in vaccination campaigns, ECB
policymaker Yannis Stournaras said.
    * Some investors view gold as a hedge against higher
inflation that could follow stimulus measures.
    * Palladium        rose 0.3% to $2,778.97 per ounce, silver
       was steady at $27.99 and platinum        gained 0.8% to
$1,200.69.
    
DATA/EVENTS (GMT)  
0645  France  Business Climate Mfg   May    

 (Reporting by Brijesh Patel in Bengaluru; editing by
Uttaresh.V)
  
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