Gold Bounces Back from Seven-Week Low but Rate Hike Fears Persist

Gold prices rebounded on Tuesday from a seven-week low after a steep selloff on Monday, but expectations for additional Federal Reserve rate hikes remain a concern.

The metal's gain was limited to about 0.6% at $4,138.80 an ounce shortly after 4 p.m. ET, with spot gold XAUUSD trading as high as $4,149.70 and as low as $4,112.80 during the session.

U.S. gold futures also finished higher, but investors remain cautious due to rising Treasury yields US10Y and a stronger dollar, which make gold more expensive for buyers using other currencies.

The decline in gold prices on Monday was driven by concerns that elevated energy prices could add to inflation, while the bounce back may be short-lived as investors await key economic reports later this week.

The personal consumption expenditures inflation report and nonfarm payrolls data are due on Wednesday and Friday, respectively, which could help determine whether Tuesday's gain marks a sustained recovery or merely a pause.