Spot gold fell 2% to $4,474.40 an ounce . Prices fell to their lowest level since March 30 earlier in the session.
U.S. gold futures for June delivery lost 1.8% to $4,476.80.
“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 holders of other currencies. At the same time, Brent crude oil prices were elevated, fanning concerns of rising global inflation as fuel costs surge.
“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,” Hansen said.
Investors now await the minutes of the Fed’s latest policy meeting, which are scheduled to be released on Wednesday, as they seek to gauge the path of monetary policy.
Spot silver slid 5.7% to $73.25 an ounce, platinum lost 2.8% to $1,923.55 and palladium dropped 3.3% to $1,371.25.