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Gold prices edged higher on Tuesday as benchmark U.S. Treasury yields pulled back after crossing above 5% in the last session, while investors awaited economic data due later in the week to gauge the outlook for U.S. monetary policy.

FUNDAMENTALS

* Spot gold was up 0.1% at $1,973.69 per ounce by 0059 GMT, while U.S. gold futures eased 0.1% to $1,985.10.

* The yield on the benchmark 10-year U.S. Treasury note declined after briefly rising above 5.0% on Monday, hitting the July 2007 milestone and further threatening an economic slowdown on higher borrowing costs. [US/]

* Markets now await U.S. GDP figures for the third quarter on Thursday and the U.S. PCE price index on Friday to gauge the economic strength of the country and for indications how it would affect the Federal Reserve's monetary path.

* High interest rates increase the opportunity cost of holding gold, which does not bear any interest.

* Investors are also worried about the war in the Middle East where Israel pounded hundreds of targets in Gaza from the air on Monday as its soldiers fought Hamas militants during raids into the besieged Palestinian strip.

* SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.4% on Monday. [GOL/ETF]

* Spot silver was up 0.1% to $23.01 an ounce, platinum fell 0.3% to $893.54 and palladium rose 0.4% to $1,122.64.

* Russia's Nornickel, the world's largest palladium producer, said on Monday its year-on-year palladium and platinum output rose by 1% and 7%, respectively, for the January-September period.