Gold Prices Drop Amid Higher Yields and Oil Price Spike

Gold prices slipped on Tuesday as investors awaited the release of minutes from the US Federal Reserve's July policy meeting. Spot gold was down 0.5 per cent at $4,391.14 per ounce, while US gold futures for December delivery dropped 0.6 per cent to $4,446.70.

The decline in gold prices can be attributed to higher US Treasury yields and a spike in oil prices. Elevated energy prices tend to raise inflationary fears and bolster expectations of higher interest rates by the US Fed.

However, market pricing for a September quarter-point hike flipped to a nearly 65 per cent chance of a 'hold' after unexpected US job losses in July, lower-than-expected consumer price inflation, and weaker retail sales. This shift in market expectations may provide some support to gold prices.