Investing.com - Gold was higher on Tuesday, as the U.S. dollar fell and U.S. Treasury yields rose.
Comex gold futures for June delivery were up 0.54% to $1,331.10 a troy ounce as of 10:18 AM ET (14:18 GMT).
The price of bouillon was supported by a slightly weaker greenback. The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, fell 0.10% to 90.60.
Gold is denominated in the U.S. currency and becomes more expensive for holders of other currencies when the dollar rises.
The dollar paused after rising to an overnight high of 90.84, its strongest level since March 1, as U.S bond yields surged. Bond yields have risen to their highest levels in four years, as inflation has added to expectations of continued rate hikes from the Federal Reserve.
The yield on the benchmark United States 10-Year Treasury note reached its highest level since January 2014 on Tuesday, at 3.00. The United States 2-Year note rose to 2.487, a level not seen since September 2008.
Expectations of higher interest rates tend to boost the dollar by making the currency more attractive to yield-seeking investors.
Higher rates are a negative for gold as the precious metal, which does not pay interest, struggles to compete with yield-bearing assets when rates rise.
Gold had recently been under pressure from improvements in geopolitical tensions. North Korea has frozen its nuclear testing and the White House has extended its deadline on possible sanctions against Russia.
The precious metal is often sought by investors as a store of value in times of market turmoil and political uncertainty and tends to decline as investor confidence returns.
Elsewhere on the Comex, silver futures were up 0.68% to $16.700 a troy ounce. Among other precious metals, Platinum Futures rose 0.70% to $928.90, while Palladium Futures slumped 1.42% to $965.60 an ounce. Copper futures increased 1.33% to $3.152 a pound.