* U.S. Treasury yields scale 14-month peak
* Palladium jumps to more than one-year high (Updates prices)
By Asha Sistla
March 18 (Reuters) - Gold slid 1% on Thursday, retreating from a more than two-week high as rising U.S. Treasury yields and a stronger dollar dented demand for the safe-haven metal.
Spot gold XAU= was down 1% at $1,726.26 an ounce by 1232 GMT after touching its highest since March 1 at $1,755.25.
U.S. gold futures GCv1 , meanwhile, were steady at $1,726.50.
"The main headwind for gold right now is surging bond yields. This is also a sign that the bond market is losing trust and confidence in the Federal Reserve being able and willing to fight inflation," said Commerzbank (DE:CBKG) analyst Carsten Fritsch.
"But this, in turn, will also be very bullish for gold in the long run."
The benchmark U.S. 10-year Treasury yield US10YT=RR rose to 1.74% for the first time since January 2020, while the dollar gained 0.3% against its rivals. US/ USD/
The U.S. Federal Reserve on Wednesday said the U.S. economy was on track for its fastest expansion in nearly 40 years, but the central bank pledged to keep its ultra-easy monetary policy stance despite expected inflationary pressure. is seen as a hedge against inflation, but rising Treasury yields have challenged that status as they translate into a higher opportunity cost of holding bullion.
"(The Fed) is getting more optimistic and that doesn't bode well for gold and suggests that the trend lower is likely to continue," said DailyFX currency strategist Ilya Spivak.
Auto-catalyst metal palladium XPD= climbed 4.5% to $2,684.72 an ounce, extending its rally to the highest level since February 2020.
Russia's Nornickel Nickel GMKN.MM , the top producer of palladium, cut its output forecast on Tuesday because of waterlogging at two Siberian mines. XAG= dropped 0.8% to $26.12 an ounce and platinum XPT= eased 0.1% to $1,212.41.