Gold Edges Higher as Treasury Yields Ease, Rate Outlook Caps Gains

Gold prices edged higher on Tuesday, supported by a softer US Treasury yield environment, even as expectations of additional interest rate increases limited the upside.

Spot gold was up 0.3% at $4,357.31 per ounce as of 0052 GMT, while US gold futures for December delivery also gained 0.3% to trade at $4,395.00. The benchmark US 10-year Treasury yield slipped for a second straight session, offering some support to the non-yielding metal.

Bullion is traditionally seen as a hedge against inflation and geopolitical risks, but its appeal tends to diminish when interest rates are high, as investors gravitate toward assets that offer yields.

The US central bank raised its policy rate by a quarter of a percentage point last week and indicated more increases could follow in the coming months. St. Louis Fed President Alberto Musalem said the Federal Reserve will likely need to hike rates further to bring down inflation driven by strong demand and a commodity price shock that has extended beyond oil. He added that it would be preferable for the central bank to act sooner rather than wait.

On the geopolitical front, Houthi fighters pushed to seize strategic heights in Yemen on Monday, aiming to cut off the Red Sea coast from remaining areas held by Saudi-backed forces. The move followed a report that President Donald Trump had called off US strikes on the group at the last minute. Trump is also set to attend the United Nations General Assembly this week, ahead of a meeting with Chinese President Xi Jinping on Thursday.

Among other precious metals, spot silver rose 0.7% to $66.48 per ounce, platinum gained 0.8% to $1,811.28 and palladium added 0.7% to $1,309.78.

Later in the day, market participants will watch the release of EU consumer confidence flash data for September.