Gold eases on stronger US rate hike odds

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. O/R

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.

Morgan Stanley joined other major Wall Street banks in adopting a more hawkish outlook on interest rates, forecasting U.S. Federal Reserve rate hikes in September and December.

Spot silver XAG= fell 0.1% to $63.16, platinum XPT= gained 0.4% to $1,765.70 and palladium XPD= inched up 0.1% to $1,293.95.

Gold prices eased on Tuesday as a rally in crude oil 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 XAU= was down 0.4% at $4,282.49 per ounce, as of 1110 GMT, after hitting its lowest point since August 7 on Monday. U.S. gold futures GCcv1 fell 0.7% to $4,323.30.

"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.