Gold prices fell for the third straight session on Tuesday, influenced by rising Treasury yields, as the continuing conflict in the Middle East intensified worries about inflation and possible interest rate increases. Spot gold decreased by 0.2% to $4,319.98 per ounce as of 0100. Bullion reached a low not observed in over two months on Monday. U.S. gold futures for August delivery recorded a decrease of 0.4%, concluding at $4,344.30. Yields on the benchmark 10-year U.S. Treasury note have ascended to a two-week peak, thereby increasing the opportunity cost associated with holding gold.

On Monday, Iran and Israel declared a halt to their mutual attacks, a decision influenced by an appeal from U.S. President Donald Trump. However, Tehran warned that it would recommence hostilities if Israel continued to target Hezbollah in Lebanon. Goldman Sachs stated that it anticipates the U.S. Federal Reserve will maintain interest rates at their current levels until 2026 and postpone any rate cuts until 2027, pointing to robust economic activity and job growth.

Traders are currently pricing in a likelihood of over 70% for a Federal Reserve rate increase by December, as suggested by the CME FedWatch tool. Citi has adjusted its near-term gold price target to $4,000 per ounce, a decrease from the previous $4,300, attributing this change to anticipated rises in U.S. interest rates this year. It was noted that the recent strength of bullion is challenging to sustain without persistent strong physical demand.

SPDR Gold Trust, acknowledged as the largest gold-backed exchange-traded fund globally, indicated a reduction in its holdings by 0.5%, resulting in a total of 929.62 metric tonnes as of Friday. Spot silver declined by 0.6% to $67.84 per ounce, platinum decreased by 0.2% to $1,750.33, whereas palladium increased by 0.6% to $1,211.