Mubasher: Gold prices rose on Wednesday propped by a weaker US dollar and lower Treasury yields, but anticipated US rate hikes curbed gains.

By 1:07 pm GMT, gold futures, for August delivery, edged up 0.03% to $1,302.60 per ounce, while spot gold added 0.17% to $1,298.47 per ounce. In the meantime, the US dollar index fell 0.32% to 93.5740.

Earlier in the day, gold futures had inched higher to $1,303.10 per ounce.

As lower US bond yields buttressed the dollar-denominated precious metal, prices increased, while the dollar declined.

Moreover, treasury yields in Europe dropped on Tuesday as investors piled into lower-risk government debt (T-bonds), after Italy’s newly sworn-in prime minister pledged to enforce economic policies that could further expand the country’s already heavy debt.

However, the US economic recovery signaled by the accelerated US service sector activity could tempt the Federal Reserve to raise interest rates next week.

As geopolitical tensions provide limited support to gold prices, a recovering US economy could lead the Federal Reserve to increase interest rate this year “and hence, the upward momentum in gold is not that strong,” Wing Fung Financial Group’s research head Mark To said.

He added that "$1,300 should be the level around which the gold price is going to move at this moment."