09:38 AM EDT, 08/06/2024 (MT Newswires) -- Gold traded lower for a second day early on Tuesday as the dollar rose following a sharp drop on Monday.

Gold for December delivery was last seen down US$10.90 to US$2,433.50 per ounce.

The drop follows Monday's market turmoil caused by recession worries as weak U.S. jobs data on Friday and a surprise hike in Japanese interest rates sent investors scurrying to the safe haven of government bonds and away from equities and commodities.

"A succession of weak US data prints throughout July helped create nervous market conditions with in-demand equity sectors suffering reversals, it was the surprise rate hike from the Bank of Japan on 31 July which triggered what can best be described as a current momentum crash," said Ole Hansen, head of commodities strategy at Saxo Bank noted.

"In addition, last week's weak US data and dovish FOMC message has significantly changed the market sentiment with traders now seeing a major risk the Fed and other central banks are repeating the errors of history by waiting too long to cut interest rates," Hansen said.

The dollar rose off a five-month low touched Monday, with the ICE dollar index last seen up 0.37 to 103.06.

Treasury yields were mixed early. The U.S. two-year note was last seen down 0.9 basis points to 3.928%, the lowest since September 2022, while the 10-year note was last seen paying 3.819%, up 2.1 basis points.