Gold Drifts Lower On Firmer Dollar, Rising Oil And Bond Yields

(RTTNews) - Gold prices traded lower on Tuesday, extending losses from the previous session as investors weighed Middle East tensions and looked ahead to monetary policy meetings of central banks, including the U.S. Federal Reserve, the Bank of England and the Bank of Japan this week.

Spot gold fell 0.7 percent to $4,268.60 an ounce after falling over 1 percent in the previous session. U.S. gold futures were down nearly 1 percent at $4,308.84.

The Federal Reserve's highly anticipated rate decision is due on Wednesday, with the central bank widely expected to hike rates by 25 basis points and deliver at least one more hike by the end of March to fight stubbornly high inflation.

The Bank of England is expected to hold rates on Thursday while the Bank of Japan is widely expected to raise its policy rate by another quarter-point to 1.25 percent on Friday, the highest level in 31 years.

The benchmark 10-year U.S. Treasury yield hovered around 5 percent, marking the highest level since October 2023.

The dollar held near a two-week high on hawkish Fed bets and amid renewed West Asia tensions.

Brent crude prices rose over 2 percent to trade above $108 a barrel amid fears of a tightening oil market after Saudi Arabia closed a critical pipeline that bypasses the Strait of Hormuz following a drone attack.

Adding to concerns over global supplies, a highly anticipated meeting in Oman between Iran and Gulf States was postponed at the last minute in the absence of conditions conducive to a constructive dialogue.

Iran claimed that a supertanker caught fire after striking naval mines while attempting to pass through a restricted area south of the Strait of Hormuz. Tehran also rejected renewed peace talks with the U.S. until its demands are met.

Elsewhere, Ukrainian President Volodymyr Zelenskyy said that Ukraine is prepared to take "de-escalatory steps" if Russia does the same, contradicting U.S. President Trump's claim earlier that both had agreed not to strike each other's energy targets.