By Brijesh Patel
(Reuters) - Gold edged lower on Tuesday, having touched a more than eight-month trough earlier in the session, as a buoyant dollar threatened to overshadow support from a slight retreat in U.S. Treasury yields and equity markets.
Spot gold was down 0.1% at $1,720.96 per ounce by 1542 GMT, after falling to $1,706.70, its lowest since June 15.
U.S. gold futures edged 0.1% lower to $1,721.40 per ounce.
The strengthening dollar "is putting some pressure on gold. The $1,700 level may be perceived as some kind of key support level for gold prices," said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
The dollar index hovered near a four-week high, making gold more expensive for holders of other currencies.
Offering some respite to gold, benchmark U.S. Treasury yields eased from a one-year high hit last week, while U.S. stocks dipped after strong gains on Monday.
"The main dilemma right now for the gold bulls is the rising short-term U.S. Treasury yields," said Bob Haberkorn, senior market strategist at RJO Futures.
"Despite the U.S. Federal Reserve being very accommodative with stimulus, with low rates for the extended period of time, in the short term we had to deal with these rising short-term rates."
While gold is considered a shield against inflation, higher yields threaten that status as they increase the opportunity cost of holding bullion.
Market participants kept a close watch on the $1.9 trillion stimulus bill, which will be debated in the U.S. Senate this week.
Silver fell 0.6% to $26.33 an ounce, having earlier dipped to a more than one-month low.
Palladium was up 0.4% at $2,358.68 an ounce, while platinum eased 0.2% to $1,182.94.
(Reporting by Brijesh Patel in Bengaluru)