Gold prices inched up on Tuesday, but stayed near two-week lows as a stronger dollar, rising US Treasury yields and receding geopolitical worries crimped safe-haven demand for the metal.

After falling for the three previous sessions, spot gold had edged up 0.1 per cent to $1,325.81 per ounce by 0417 GMT. That was not far from a low of $1,321.81 touched on Monday, its weakest since April 6. US gold futures rose 0.3 per cent to $1,327.80 per ounce.

“Gold is going up and down with views on risk-aversion ... less risk-aversion is pushing it down. We feel that there could be more downward pressure on gold in the near-term,” said John Sharma, an economist with National Australia Bank.

“(A strong) dollar makes gold expensive for non-US buyers and rising yields increase the opportunity cost of holding gold, which is another factor lessening gold's appeal.”

The dollar rose to more than three-month highs against a basket of currencies as the US 10-year Treasury yield climbed towards the psychologically key 3 per cent level. The US 10-year Treasury yield hit its highest in over four years on Monday.

Geopolitical risks ease

Gold prices also came under downward pressure from an improvement in the geopolitical environment, with the US Treasury Secretary cautiously optimistic on his negotiations with China, North Korea freezing its nuclear testing, and Washington extending its deadline for sanctions against Russia's Rusal, said OCBC analyst Barnabas Gan.

Palladium plunged 5 per cent on Monday after the United States gave American customers of Russia’s biggest aluminium producer, Rusal, more time to comply with sanctions. Rusal owns a 28 per cent stake in Norilsk Nickel, the world's biggest palladium producer.

Palladium was up 0.5 per cent on Tuesday at $983.22 an ounce. Silver rose 0.9 per cent to $16.67 an ounce, having fallen over 3 percent in the previous session. Platinum was 0.2 per cent higher at $919.70.

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