Gold Prices Fall Amid Stronger Dollar and Higher Yields

Gold prices fell on Tuesday, closing a two-day rally as a stronger US Dollar and higher long-term US Treasury yields weighed on the metal. The XAU/USD was trading near $4,396, down 0.47% on the day. A global bond sell-off linked to inflation and fiscal concerns drove up borrowing costs in major economies, including the UK, Germany, and Japan.

The US Dollar Index (DXY) rebounded from its weakest level since June 5 to around 99.67. Oil-led inflation concerns remained in focus as tensions over the Strait of Hormuz persisted, with the US saying it was not seeking an extension of a memorandum of understanding with Iran that expired on Monday.

Markets are pricing a 65% chance that the Federal Reserve will keep interest rates unchanged next month, according to the CME FedWatch Tool. Attention is turning to the FOMC minutes on Wednesday for clues on the Fed's stance.