May 19 (Reuters) - Gold prices fell by more than 1% on Tuesday on a firmer U.S. dollar and as persistent inflation fears kept interest rate hike expectations and Treasury yields high.
Spot gold was down 1.4% at $4,503.98 per ounce by 1:45 p.m. ET (1745 GMT). Prices fell to their lowest level since March 30 earlier in the session.
U.S. gold futures for June delivery settled 1% lower at $4,511.20.
"We are seeing a multi-country rise in real rates around the world, and that is really weighing mostly on gold. The dollar is also stronger, that's a negative," said Edward Meir, an analyst at Marex.
Benchmark 10-year U.S. Treasury yields were near a more than one-year high, while the U.S. dollar strengthened. Both rose as investors eyed a possible hawkish shift by the Federal Reserve to curb energy-driven inflation.
Higher Treasury yields raise the opportunity cost of holding non-yielding gold and a stronger dollar makes greenback-priced commodities more expensive for other currency-holders.
Brent crude oil prices were elevated on supply concerns, fanning concerns of rising global inflation as fuel costs surge. Soaring inflation forces central banks to keep rates high to ease price pressures.
Despite being an inflation hedge, gold usually comes under pressure in high interest rate environments.
Markets now see very limited scope for rate cuts through most of 2026, with expectations shifting toward no change or tightening later in the year.
"While the structural investment case for gold remains largely intact, shorter-term macro developments have created a more challenging backdrop for prices," Ole Hansen, head of commodity strategy at Saxo Bank, wrote.
"Once immediate energy-related pressures begin to ease, central bank demand may re-emerge as a more dominant driver."
Market participants await minutes of the Fed's latest policy meeting, due on Wednesday.
Spot silver dipped 4.1% to $74.53 per ounce, after touching an around two-week low earlier in the session. Platinum lost 2.2% to $1,936.10 and palladium dropped 4.2% to $1,359.26.
J.P. Morgan on Sunday forecast $2,400/oz in the fourth quarter of 2026 for platinum, and added that it sees palladium at $1,600/oz in the same period.
Reporting by Anjana Anil in Bengaluru; Editing by Alexander Smith
