02:00 PM EDT, 05/07/2024 (MT Newswires) -- (Updates prices.)

Gold traded lower midafternoon on Tuesday despite falling treasury yields amid an uncertain geopolitical outlook as Israel and Hamas continue indirect talks for a ceasefire deal.

Gold for June delivery was last seen down US$5.90 to US$2.325.30 per ounce.

The drop comes on growing expectations for a deal in the war between Israel and the Hamas militant group rise after Israel rejected an Egyptian ceasefire proposal accepted by Hamas on Monday, but said it will send a representative to further indirect negotiations in Cairo, even as it stepped up attacks in the crowded city of Rafah in southern Gaza.

The dollar rose, with the ICE dollar index last seen up 0.24 points to 105.29.

Treasury yields were lower as weak economic data released last week renewed hopes the Federal Reserve will lower interest rates this year, lowering the carrying cost of owning gold.

"Gold has shifted into consolidation mode and is now testing the thesis that a correction can be moderate if the Fed manages to avoid introducing the possibility of further hikes being required in this cycle," Deutsche Bank said in a Monday note. "This will depend on economic data, and the US April employment report serves as an important point of reassurance."

The US two-year note was last seen paying 4.824%, down 1.3 basis points, while the yield on the 10-year note was down 4.3 basis points to 4.447%.