Gold prices were little changed during Asian trading on Tuesday as the United States dollar rebounded in a risk-off environment, while rising U.S. Treasury yields across the curve weighed on the precious metal.
By 4 pm AEST (6 am GMT), spot gold was trading 0.1% lower at US$4,441.64 an ounce.
The U.S. dollar continued to draw support from increased expectations of a Federal Reserve interest rate hike in September, following Chair Kevin Warsh's indication on Friday that higher rates may be needed to contain inflation.
Markets are currently pricing in a 66.4% probability of a September rate increase, up from 39.6% a week earlier, according to the CME Group FedWatch Tool.
Renewed hostilities in the Middle East have also increased geopolitical risk premiums, supporting demand for the safe-haven U.S. dollar while creating a headwind for gold, which is priced in the Greenback.
U.S. President Donald Trump threatened further strikes against Iran on Monday following the first direct exchange of attacks between the two countries in a month.
Meanwhile, the United Kingdom Maritime Trade Operations (UKMTO) said a tanker was reportedly struck by three projectiles while sailing out of the Strait of Hormuz.
Investors are now turning their attention to a series of U.S. labour market indicators due this week for further clues on the Fed's monetary policy outlook.
Key releases include the ADP Employment Change and U.S. Nonfarm Payrolls (NFP), while the JOLTS Job Openings Survey and ISM Manufacturing Employment Index are also expected to provide insight into labour market conditions.
