Gold prices dipped on Monday (May 2) as elevated US Treasury yields pressured demand for zero-yield bullion, ahead of a key US Federal Reserve meeting later this week where the central bank is expected to aggressively raise its interest rates.

Spot gold was down 0.3 per cent at US$1,890.69 per ounce, as of 0053 GMT. US gold futures dropped 1 per cent to US$1,893.40.

The US Fed’s Federal Open Market Committee is expected to begin its 2-day meeting on interest rates on May 3 and announce its decision the next day.

Fed policymakers look set to deliver a series of aggressive interest rate hikes at least until the summer to deal with rapid inflation and surging labour costs, even as two reports on Friday showed tentative signs both may be cresting.

Benchmark 10-year US Treasury yields rose on Monday, pressuring demand for gold.

Higher short-term US interest rates and bond yields tend to increase the opportunity cost of holding bullion, which yields nothing.

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Gold prices rallied 1 per cent on Friday after the US dollar retreated, but the metal ended April slightly lower on bets of aggressive policy tightening by the US central bank.

Bullion is also seen as a safe store of value during times of economic and political crises.

Around 100 Ukrainian civilians were evacuated from the ruined Azovstal steelworks in the city of Mariupol on Sunday, Ukrainian President Volodymyr Zelenskiy said, after the United Nations confirmed a “safe passage operation” was in progress there.

Spot silver fell 0.4 per cent to US$22.66 per ounce, platinum dipped 0.2 per cent to US$929.51, and palladium slid 1.7 per cent to US$2,281.99. REUTERS