Investing.com -- Gold prices rose slightly on Tuesday, taking some relief from a weaker dollar as the greenback retreated from two-month highs, although fears of higher U.S. interest rates still kept the outlook for metal markets muted.
The yellow metal saw some signs of recovery after slumping to a five-month low earlier this month. Spot prices also lost the closely-watched $2,000 an ounce level, and were still struggling to break above.
Spot gold rose 0.1% to $1,896.39 an ounce, while gold futures expiring in December rose 0.1% to $1,924.90 an ounce by 00:21 ET (04:21 GMT).
Treasury yields surge ahead of Jackson Hole
But while gold saw some relief on Tuesday, the outlook for the yellow metal was largely dampened by a spike in U.S. Treasury yields.
10-year yields surged to an over 20-year high this week as markets positioned for potentially higher-for-longer U.S. interest rates.
Focus this week is squarely on an address by Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium this Friday. The Fed Chair is expected to provide more cues on the path of monetary policy, with sticky inflation and a tight labor market potentially inviting a hawkish outlook from the central bank.
Investment banks warned that Powell could flag a new era of higher baseline rates - a scenario that bodes poorly for metal markets.
The prospect of rising U.S. rates battered gold in recent weeks, given that higher rates push up the opportunity cost of investing in non-yielding assets.
Strength in the dollar also weighed, although the greenback fell slightly from a two-month high this week. This offered some relief to gold prices.
Copper edges higher, China stimulus in focus
Among industrial metals, copper prices also advanced slightly on Tuesday, benefiting from weakness in the dollar.
Copper futures rose 0.2% to $3.7263 a pound.
But prices of the red metal were also nursing steep losses over the past three weeks, amid growing impatience with more stimulus measures in China.
The People’s Bank of China largely disappointed markets with its interest rest cut this week, drawing calls from investors for more targeted, fiscal measures to support a slowing economic recovery.
China is the world’s largest copper importer, with an economic slowdown in the country this year having weighed heavily on copper prices and demand.