Gold prices experienced a modest increase on Tuesday, influenced by a decline in US Treasury yields. However, the prospect of elevated interest rates constrained the extent of these gains. Spot gold increased by 0.3%, reaching $4,357.31 per ounce, as of 0052. US gold futures for December delivery increased by 0.3%, reaching a price of $4,395.00. The benchmark US 10-year yield experienced a decline for the second consecutive session. Bullion is traditionally regarded as a safeguard against inflation and geopolitical uncertainties; however, its attractiveness diminishes in a high-interest-rate context, as investors gravitate toward yield-generating assets.

The US central bank increased its policy rate by a quarter of a percentage point last week and indicated the possibility of additional hikes in the months ahead. The Federal Reserve will likely need to hike rates further to lower inflation resulting from strong demand as well as a commodity price shock that has moved beyond oil, St. Louis Fed President Alberto Musalem said, adding that it would be better for the US central bank to act sooner than wait. On the geopolitical front, Houthi fighters advanced to capture strategic elevations in Yemen on Monday, aiming to sever the Red Sea coast from the remaining territories controlled by Saudi-backed forces.

This manoeuvre followed a report indicating that President Donald Trump had cancelled US strikes on the group at the last moment. Meanwhile, Trump is set to attend the United Nations General Assembly this week, preceding a meeting with Chinese President Xi Jinping on Thursday. Among other metals, spot silver rose 0.7% to $66.48 per ounce, platinum gained 0.8% to $1,811.28, and palladium added 0.7% at $1,309.78.