Gold prices fell over 1% on Tuesday, pressured by a firmer dollar and higher U.S. Treasury yields after Federal Reserve Governor Christopher Waller's hawkish remarks on interest rate cuts this year, but safe-haven buying limited bullion's downside.
Spot gold was down 1.3% at $2,027.26 per ounce as of 2:36 p.m. ET (1936 GMT), after gaining in the previous three sessions.
U.S. gold futures settled more than 1% lower at $2030.2.
"Strong gains in the U.S. dollar index are pressuring the gold market as well as a rise in U.S. Treasury yields today on this first day back from the three-day holiday weekend," said Jim Wyckoff, senior analyst at Kitco Metals.
"However, one could argue that losses in gold are not bad compared to how strong the dollar is as tensions in the Middle East are keeping a floor under the prices."
The dollar index rose nearly 1% to a more than one-month high, making bullion less attractive for other currency holders, while yields on the benchmark U.S. 10-year Treasury notes also gained.
Waller said the United States was "within striking distance" of the Fed's 2% inflation goal, but the central bank should not rush towards cuts in its benchmark interest rate until it is clear lower inflation will be sustained.
The Fed bank is widely expected to hold its policy rate steady at the end of its Jan. 30-31 meeting. Traders see a 67% probability of an interest rate cut in March, according to the CME Fedwatch tool.
Elsewhere, European Central Bank officials also pushed back against market expectations for rapid rate cuts this year.
Spot silver fell 1.2% to $22.93 per ounce.
Platinum declined 2.1% to $895.56 and palladium slipped 3.8% to $934.32, marking its lowest level in over one month.