* Gold should bottom when Treasury yields peak, analyst says
* Fed's policy meeting this week in focus (Updates prices)
By Nakul Iyer
March 15 (Reuters) - Gold prices rose on Monday as U.S. Treasury yields backed off recent highs and investors awaited cues from the Federal Reserve's policy meeting.
Spot gold XAU= rose 0.2% to $1,729.94 per ounce by 1:47 pm EDT (1747 GMT). U.S. gold futures GCv1 settled up 0.5% at $1,729.20.
"Yields are calm this morning and the recent dip in gold is viewed as a buying opportunity by most," said David Meger, director of metals trading at High Ridge Futures.
The big question will be whether rising yields, on the back of optimism over an economic recovery, will pressure gold, or if growth stalls or inflation picks up, which should support gold, Meger added.
Benchmark U.S. Treasury yields US10YT=RR eased from a more than one-year peak, restoring some of the appeal of non-interest bearing gold. US/
"Whenever yields peak, that will be the bottom for gold," Phillip Streible, chief market strategist at Blue Line Futures in Chicago, said.
"They (yields) still have room to extend higher but yields are not going to go up forever, so there's going to be a turning point. ... The higher we go, the closer we get to the turning point."
Gold also drew support from the signing of a $1.9 trillion U.S. relief bill into law, which spurred inflationary fears, since bullion is used to hedge against rising prices. await a two-day Fed meeting that starts on Tuesday, with the focus on a recent spike in bond yields, fears about rising inflation and the economic outlook. metals will be held hostage by Treasury markets as the Fed's reactive approach to the steepening in rates will continue to lead to investment outflows," TD Securities said in a note.
In other metals trading, silver XAG= was up 1.1% at $26.20 an ounce. Palladium XPD= gained 0.4% to $2,381.65 and platinum XPT= rose 0.3% to $1,207.99.