Gold prices steadied in European trade on Wednesday below $1,300 for the first time in five months as dollar extended gains against a basket of major rivals on the back of a surge in long-term US treasury yields. 

As of 10:40 GMT, gold prices inched up to $1,291.10 an ounce from the opening of $1,289.78, with a session-high at $1,296.92, and a low at $1,289.59. 

Gold lost 1.8% yesterday, the third loss in a row and the largest since July 3, 2017, marking five-month lows at $1,288.69 as dollar rallied. 

The dollar index rose 0.2% on Wednesday on track for the third profit in a row, hitting five-month highs at 93.40, heaping pressure on dollar-denominated commodity futures. 

Dollar's surge came alongside a similar one in 10-year US treasury yields to seven-year highs at 3.095%, rekindling fears about yawning gaps in interest rates between the US and other countries. 

Yields are backed by strong inflation outlook as oil prices hit 3-1/5 year highs, paving the way for policy tightening and interest rate hikes by the Federal Reserve. 

Gold holdings at SPDR Gold Trust, the world's largest gold-backed investment fund, steadied at 856.17 tonnes on Tuesday with no change, the lowest since April 5, after rising 3%, or 23.63 tonnes in 2017, while gold prices rose 13% last year.