Early on Thursday, gold prices are trading mostly unchanged as US Treasury yields ease lower but the US dollar gains strength against other major currencies over escalating worries about the economic impact of the third wave of the pandemic in Europe. At the time of writing, GOLD is trading at a little above $1,734.

US Treasury yields have slid lower after the latest auction of five-year notes received average demand, coming down from an over one-year high touched last week. Stronger bond yields increase the opportunity cost of holding non-yielding bullion and had been exerting downward pressure on gold lately.

However, the decline in treasury yields had no impact on the US dollar, which continues to hold strong and is trading near a four-month high against its major rivals. The safe haven appeal of the greenback has been supported as markets worry about European countries announcing fresh restrictions and lockdowns to contain the latest wave of the pandemic even as COVID-19 vaccine distribution in the region remains sluggish.

Even as this sentiment is offering some support to the safe haven appeal of the yellow metal, strong economic data and optimistic comments from US officials about economic recovery in the US is capping gains in gold prices lately. The US is set to post a faster economic recovery than most other parts of the world, even though the latest core durable goods orders registered a surprising drop during the past month.