Sept 15 (Reuters) - Gold prices eased on Tuesday as a rally in crude underscored inflation risks, reinforcing expectations of a Federal Reserve rate hike and lifting Treasury yields ahead of the central bank's policy meeting this week.
Spot gold was down 0.7% at $4,266.49 per ounce, as of 0853 GMT, after hitting its lowest point since August 7 on Monday. U.S. gold futures fell 1% to $4,307.40.
"The pressure on gold reflects a combination of rising oil prices, a U.S. rate hike on Wednesday being almost fully priced in, a stronger dollar and, not least, long-end bond yields reaching higher levels," said Ole Hansen, head of commodity strategy at Saxo Bank.
"A move back above $4,440 would, in our opinion, be needed to ease the current downside pressure."
The U.S. central bank will announce its policy decision at 1800 GMT on Wednesday.
Traders are currently pricing in a 92% chance of a 25-basis-point hike, according to the CME FedWatch Tool.
The dollar climbed, making greenback-priced bullion more expensive for holders of other currencies, while benchmark 10-year U.S. Treasury yields rose to their highest since 2007.
Though seen as a hedge against inflation and geopolitical risks, gold often loses appeal when rates rise as they increase the opportunity cost of holding the non-yielding precious metal.
Oil prices rose nearly 2% as concerns over supply disruptions lingered after the attacks on Saudi Arabian energy infrastructure left the kingdom's East-West pipeline offline and cast doubt on efforts to ease shipping risks in the Gulf.
Yemen's Iran-aligned Houthis launched a new wave of attacks on Saudi Arabia and were digging into positions on the western coast of Yemen along the Red Sea, Yemeni officials said.
Spot silver fell 0.7% to $62.80, platinum lost 1% to $1,742.74 and palladium fell 1.1% to $1,282.79.
Reporting by Pablo Sinha in Bengaluru; Editing by Jochelle Mendonca
