Update: Gold Rises Off a Near Three-Month Low as Treasury Yields Drop

(Updates prices.)

Gold traded higher early Wednesday, rising off a near three-month low as treasury yields fell.

Gold for April delivery was last seen up US$154.40 to US$4,588.50 per ounce, after falling to the lowest since Jan. 2 a day earlier.

The price of the metal has dropped 18% since the United States and Israel launched their war on Iran on Feb. 28. While gold is usually regarded as a store of value amid geopolitical turbulence, the war has blocked oil exports from the Persian Gulf, which supplies 20% of daily demand, threatening a renewed bout of inflation and higher interest rates, bearish for gold since it pays no interest.

"Elevated oil prices have fuelled inflation concerns, reducing rate cut expectations while pushing yields and the dollar higher. A degree of normalisation would ease these pressures, allowing investors to refocus on gold's long-term case, which in our view has been challenged but not removed," Saxo Bank noted.

The dollar higher, with the ICE dollar index last seen 0.2 points to 99.46. Treasury yields fell, with the yield on the U.S. two-year note last seen down 5.4 basis points to 3.881%, while the 10-year note was paying 4.323%, down 4.6 points.