(Recasts, adds comments, updates prices)
* 10-year Treasury yields hover near highest since March
* Investors await progress on U.S. COVID-19 relief package
* Interactive graphic tracking global spread of coronavirus: https://tmsnrt.rs/3mvcUoa
By Shreyansi Singh
Feb 8 (Reuters) - Gold rose on Monday as investor focus returned to prospects of a substantial U.S. stimulus package, which bolstered bullion's appeal as an inflation hedge and offset pressure from a resultant rally in equities and a firmer dollar.
Spot gold XAU= rose 0.8% to $1,825.69 per ounce by 1258 GMT. U.S. gold futures GCv1 also added 0.6% to $1,822.90.
President Joe Biden and his Democratic allies in Congress cleared the path for their $1.9 trillion COVID-19 relief package as lawmakers approved a budget outline that will allow them to muscle Biden's plan through in the coming weeks without Republican support. is drawing strength from the renewed optimism over U.S. stimulus plans and rising inflation expectations," said Lukman Otunuga, senior research analyst at FXTM.
"The metal continues to be pulled and tugged by conflicting forces," and while gold bulls remain protected by the 'reflation trade', stimulus hopes continue to lift the market mood and overall risk sentiment, Otunuga added.
World shares hit a record high on Monday on hopes that the$1.9 trillion COVID-19 aid package will be passed by U.S. lawmakers as soon as this month. MKTS/GLOB is finding some supportive sentiment from U.S. Treasury Secretary Janet Yellen "talking quite aggressively" about stimulus, although the relief package might not come until March, said StoneX analyst Rhona O'Connell.
Gold's gains came despite a slightly higher dollar .DXY that makes bullion more expensive for buyers with other currencies. USD/ gold's uptick a likely corrective move from last week's selloff, when prices slid below the key $1,800 level, OANDA analyst Craig Erlam said the $1,830 mark posed a key technical resistance.
Limiting gold's upside, benchmark 10-year Treasury yields US10YT=RR hovered near their highest since March last year, increasing the opportunity cost of holding non-yielding bullion. US/
Among other precious metals, spot silver XAG= gained 1.3% to $27.17 an ounce, platinum XPT= rose 2.8% to $1,155.12 and palladium XPD= added 0.6% to $2,351.18.