Gold slips as US dollar, yields rise ahead of Fed minutes

By Pablo Sinha

Gold prices eased on Tuesday as the U.S. dollar and Treasury yields rose, with investors awaiting minutes of the U.S. Federal Reserve's June meeting that are due Wednesday for insight into its monetary policy direction under new Chair Kevin Warsh.

Spot gold TVC:GOLD fell 0.9% to $4,126.31 per ounce by 0752 GMT, while U.S. gold futures TVC:GOLD for August delivery eased 0.7% to $4,138.

Without clear market drivers and on thin liquidity, gold appears to be undoing some of its gains from the level it started trading Monday, according to Matt Simpson, a senior analyst at StoneX.

"It had a decent bounce last week, so it's not out of the ordinary to retrace against some of that move at the start of this week," said Simpson.

The dollar gained, making greenback-priced bullion more expensive for holders of other currencies, while yields on the benchmark 10-year U.S. Treasury note TVC:US10Y advanced to a two-week high.

"Markets are obviously waiting for a little bit of direction from the Fed minutes to get a bit more sense around what the Fed's thinking is on the short-term interest rate policy," said Nicholas Frappell, global head of institutional markets at ABC Refinery.

Gold prices are down more than 25% from record highs hit earlier this year, as the U.S.-Israeli war with Iran stoked inflation concerns, boosted the dollar and reinforced expectations of interest rate hikes.

Bullion hit a two-week high on Monday as a ceasefire deal eased some of those inflation concerns, with last week's weaker-than-expected U.S. jobs data also prompting markets to dial back near-term interest rate-hike expectations.

Traders now see about a 56% chance of a rate increase in September, down from more than 60% before the data, according to the CME FedWatch tool.

Higher interest rates make non-yielding bullion less attractive for investors.

Hong Kong launched a central clearing system for gold on Tuesday and also revived gold futures trading as it seeks to become a regional reserve hub for the precious metal.

Spot silver BIST:XAGUSD1! slipped 2% to $60.82 per ounce, platinum NYMEX:PL1! eased 0.6% to $1,622, and palladium BIST:XPDUSD1! lost 0.6% to $1,260.41.