PRECIOUS-Gold steady as weaker dollar offsets rising Treasury yields

(Updates for US mid-session trading)

* Oil prices turn positive

* Benchmark 10-year U.S. Treasury yields at highest since February 2025

* JPMorgan cuts 2026 gold price view

By Anjana Anil

May 18 (Reuters) - Gold steadied on Monday as support from a weaker U.S. dollar offset pressure from higher Treasury yields and inflation concerns stemming from rising oil prices.

Spot gold was largely unchanged at $4,540.49 per ounce as of 12:35 p.m. ET (1635 GMT). It hit its lowest since March 30 earlier in the session, before climbing around 1%.

U.S. gold futures for June delivery were down 0.4% at $4,544.90.

The dollar fell against most major currencies, making bullion, which is priced in the currency, more affordable for other currency holders.

"The U.S. dollar index dropped to its session lows - that's a friendly element for the gold market," said Jim Wyckoff, market analyst at American Gold Exchange.

He added, however, that rising bond yields would probably limit the upside "if not cause further downside price pressure on the metals here in the near term".

GOVERNMENT BONDS EXTEND LOSSES Government bonds globally extended losses on Monday as higher energy prices driven by the Iran war fuelled inflation concerns and reinforced expectations of central-bank rate hikes.

Benchmark 10-year U.S. Treasury yields, which move inversely to prices, climbed to their highest since February 2025, increasing the opportunity cost of holding bullion.

Meanwhile, oil futures turned positive in volatile trade as concerns over supply disruptions offset worries about the economic outlook. Prices were down earlier in the session after reports citing Iranian media suggested a possible U.S. sanctions waiver for Iranian oil.

Oil has risen since the beginning of the U.S.-Israel war against Iran, fanning inflation concerns and prompting expectations of tighter monetary policy from central banks.

Non-yielding gold, a traditional safe-haven asset and inflation hedge, tends to underperform in high-interest-rate environments as investors turn to investments that offer better returns. Some banks have started trimming their near-term gold price forecasts as investor demand slips, with JPMorgan among the first major lenders to cut its 2026 average gold price forecast to $5,243 per ounce from $5,708.

Spot silver rose 1% to $76.73 per ounce, while platinum edged 0.5% lower to $1,964.04 and palladium gained 0.1% to $1,413.50. (Reporting by Anjana Anil in Bengaluru; Editing by Emelia Sithole-Matarise, Jonathan Ananda and Barbara Lewis)