Gold prices fell during Asian trading on Tuesday, slipping below the US$4,400 an ounce level and ending a two-session winning streak as the United States dollar extended its recovery amid a risk-off mood.
Rising oil prices have also renewed concerns about inflation and pushed U.S. Treasury yields higher, adding pressure on the non-yielding precious metal ahead of the release of the Federal Reserve's July meeting minutes later in the week.
By 3:35 pm AEST (5:35 am GMT), spot gold was trading 0.6% lower at US$4,390.06 an ounce.
U.S. President Donald Trump said on Monday that he was not interested in extending the expiring agreement with Iran.
He also continued to highlight the U.S. naval blockade of the Strait of Hormuz as leverage over Tehran, while maintaining that Washington retained control of the strategically important waterway.
The lack of progress towards ending the U.S.-Iran conflict triggered renewed buying in oil on Monday, pushing crude prices higher and contributing to an increase in longer-dated U.S. Treasury yields.
Early Tuesday, the 30-year U.S. Treasury yield climbed to 5.321%, its highest level since mid-2007.
Financial markets remained in a risk-off mode amid uncertainty surrounding the Middle East conflict and the Federal Reserve's monetary policy outlook.
Markets are currently pricing in a 36.6% probability of a Fed rate hike next month, down from 48.4% a week earlier, according to the CME Group FedWatch Tool.
Looking ahead, developments in the Middle East, along with U.S. housing and industrial data, could provide fresh direction for gold prices as investors position for the release of the Fed's July meeting minutes on Wednesday (Thursday AEST).
