Gold Edges Up as Treasury Yields Ease, But Higher Interest Rates Loom

Gold prices edged up on Tuesday as US Treasury yields eased, but expectations of higher interest rates limited gains. Spot gold gained 0.3% to $4,357.31 per ounce, while US gold futures for December delivery rose 0.3% to $4,395.00.

The benchmark US 10-year yield slipped for a second consecutive session, which helped boost the appeal of bullion as a hedge against inflation and geopolitical risks.

However, its appeal tends to wane in a high-interest-rate environment, where investors favor yield-bearing assets. The US central bank raised its policy rate by a quarter of a percentage point last week and flagged more hikes in the coming months.

St. Louis Fed President Alberto Musalem said that it would be better for the US central bank to act sooner than wait, as the Federal Reserve will likely need to hike rates further to lower inflation resulting from strong demand as well as a commodity price shock that has moved beyond oil.