Gold prices eased on Tuesday as the dollar held firm on rising prospects of further sanctions against Russia and possibly more aggressive interest rate hikes by the US Federal Reserve to rein in inflationary pressures.

Spot gold was down 0.2% at $1,929.31 per ounce by 0721 GMT. US gold futures were up 0.1% at $1,935.50.

“The more liquid something is, the less the volatility. And, if markets are running away from risk the dollar then becomes a natural haven,” said Ilya Spivak, a currency strategist at DailyFX.

“Now in real terms, those yields are still negative once we discount break evens. And I think that’s why gold hasn’t fallen more significantly, but if this sort of repricing for a more hawkish Fed continues and we do get positive real rates, I think gold is going to look quite unattractive.”

The dollar index was steady after three straight sessions of gains as talks of further sanctions against Moscow increased.

A stronger dollar makes gold less attractive for other currency holders.

US two-year Treasury yields climbed to their highest level since early-2019 and 10-year yields ticked higher on Monday. Higher yields increase the opportunity cost of holding non-paying bullion.

Gold slips as dollar, yields strengthen on robust US jobs data

“During these uncertain times, gold remains supported as a critical portfolio hedge that will shine during the most challenging juncture when inflationary pressures remain strong but growth slows,” Stephen Innes, managing partner at SPI Asset Management, said in a note.

Spot silver rose 0.6% to $24.64 per ounce, platinum fell 0.6% to $980.36 and palladium climbed 1.2% to $2,301.05.