U.S. Treasury bonds hold steady as gold prices continue their slide.

Prices of government bonds were steady on Monday in response to falling gold prices and expectations of more weak economic news.

At 4 p.m. in New York, the price of the Treasury's 30-year bond was up 1/8 and the yield was unchanged at 5.87%.

Stocks moved higher on the strength in bonds and the signing of the Middle East accord. The dollar advanced.

"The continued slide of gold and expectations of more soft economic data provided a lift to the bond market," said Douglas Schindewolf, economist at Smith Barney Shearson Inc.

Gold prices, which had been on the upswing for most of the summer, have come down sharply in recent weeks amid diminishing inflation. Gold is a traditional hedge against inflation.

On Monday on the New York Commodities Exchange. the October gold futures contract was quoted at $343.10 an ounce, down $7.60.

Inflation Index Down

The most recent good news on inflation came Friday with the government's report that the Producer Price Index fell 0.6% in August on the strength of a big drop in tobacco prices.

More good news is expected today, with the release of the August Consumer Price Index. Economists think the index was unchanged to 0.1% higher.

At 4 p.m., 10-year Treasuries yielded 5.28%, unchanged. But two-year notes were down 1/16, raising the yield to 3.81% from 3.77%.

Auction of Treasury Bills

Interest rates rose at the government's weekly auction of Treasury bills.

The $11.3 billion in three-month bills were sold at an average discount rate of 2.98%, up from 2.95%. The $11.3 billion in six-month bills were sold at an average rate of 3.06%, versus 3.03%.

The government will sell $15.2 billion in one-year bills on Thursday.

The Dow Jones industrial average gained 12.3 points to 3,633.93. The Standard & Poor's 500 index rose 0.34 to 462.06. But the Nadsaq composite index lost 3.98 to 740.33.

The dollar finished at 1.6075 marks, up from 1.5965, and at 106.20 yen, up from 106.05.

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