* Dollar/yen jumps to 3wk peak after U.S. 10y yield rises
* USD inches ahead on other majors
* Kiwi dips after RBNZ extends QE, talks of negative rates
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook and Eimi Yamamitsu
SINGAPORE/TOKYO, Aug 12 (Reuters) - The dollar inched ahead on Wednesday, as a jump in U.S. yields pushed it higher against the Japanese yen, while the kiwi briefly hit a one-month low after the central bank extended its bond buying programme.
The yield on 10-year U.S. debt, which rises when bond prices fall, made its steepest gain in two months on Tuesday ahead of the largest ever 10-year auction later on Wednesday.
That triggered a wave of gold selling, which deepened in Asia, and it has pressured the yen as better returns on U.S. debt lures investment from zero-yielding Japan.
The yen fell 0.2% to 106.71 per dollar, its lowest since July 24. The tumbling gold price, which has dropped roughly 7% in two days, also dragged on the Australian dollar since Australia is the world's second biggest gold producer.
The Aussie fell 0.3% to $0.7126 while the New Zealand dollar fell 0.5% to $0.6547.
Elsewhere in financial markets, the focus was on the political holdup in Washington over a new stimulus package, which capped broader investor sentiment.
The jump in yields was driven by both repositioning ahead of big debt issuance this week and a sense that the global recovery is looking broader and more robust - a mood helped somewhat by Russia hailing the approval of a COVID-19 vaccine.
"As we draw closer to a COVID-19 vaccine approval...we think that more economic optimism could be baked into U.S. rates," said Eugene Leow and Philip Wee, strategists at Singapore's DBS Bank, in a note.
"The narrative could shift from second wave (and localised containment) worries to pricing in the prospect of a second leg of economic recovery once vaccines become more widely available around mid-2021."
Against a basket of currencies, the dollar extended a bounce made last Friday as U.S.-China tensions ratcheted higher with President Donald Trump's ban on TikTok and WeChat.
It last sat at 93.778. Against the euro the greenback was a tad firmer at $1.1729 and against the pound it extended Tuesday gains that followed a weak British jobs report to hit $1.3021 per pound.
The dollar index has slumped 9% from a three-year high it hit in March and lost 4% in July alone, leaving investors divided over whether the support the greenback has found in August amounts to a bounce or a pause in its decline.