BENGALURU: Gold prices eased on Tuesday as the dollar firmed, although expectations of a US rate cut in September and escalating geopolitical tensions in the Middle East kept bullion above the key $2,400 per ounce level.

Spot gold fell 0.2% at $2,401.75 per ounce by 10:09 a.m. ET (1409 GMT). The metal fell 1.5% in the previous session, driven by global sell-off as fears of the US tipping into recession lingered. US gold futures lost 0.1% to $2,442.90. The dollar index was up 0.3%, in its first day trading higher against the Japanese currency this month, making greenback-priced bullion less affordable for overseas buyers. “There’s still some weakness in gold mainly driven by dollar strength ... but the macro environment for gold is relative positive so we’ll probably see some range-bound activity in gold over the near term,” said Amelia Xiao Fu, head of commodity markets at BOCI. Lebanon’s armed group Hezbollah launched a series of drone and rocket attacks into northern Israel.

Fed policymakers pushed back against the notion that weaker-than-expected July jobs data means the economy is in recessionary freefall, but also warned that rate cuts will be needed to avoid such an outcome. Bullion is considered a safe asset amid economic uncertainties and benefits from a low interest rate environment. Investors expect central banks to cut interest rates, which should limit the downside potential for gold, if not lift it to new record highs, said Fawad Razaqzada, market analyst at Forex.com, adding that he expects gold to hit $2,500 in the short term. Markets see a 100% chance of a rate cut in September, according to the CME FedWatch Tool. Spot silver fell 0.1% to $27.24 per ounce while platinum rose 1.4% to $919.30.

“The trend towards climate-neutral generation of solar power is likely to continue regardless of economic developments. However, headwinds are coming from falling sales of electric vehicles, in which silver is also used,” Commerzbank said in a note. Palladium gained 2.4% to $870.00 after hitting its lowest levels since 2017 on Monday due to recession fears