Spot gold was 1.3% lower at $2,027.26 per ounce, after advancing in the earlier three sessions

Gold prices dropped more than 1% on Tuesday, pressured by a stronger dollar and higher U.S. Treasury yields after Fed Governor Christopher Waller’s hawkish remarks on interest rate cuts this year, but safe-haven buying limited bullion’s downside.

Spot gold was 1.3% lower at $2,027.26 per ounce as of 1936 GMT, after advancing in the earlier three sessions.

U.S. gold futures settled more than 1% lower at $2030.2.

Strong gains in the U.S. dollar index are pressuring the gold market as well as an increase in U.S. Treasury yields today on this first day back from the three-day holiday weekend, said Jim Wyckoff, senior analyst at Kitco Metals.

However, one could argue that losses in gold are not bad compared to how strong the dollar is as tensions in the Middle East are keeping a floor under the prices, he said.

The dollar index added around 1% to an over one-month high, making bullion less attractive for other currency holders, while yields on the benchmark U.S. 10-year Treasury notes also advanced.

Waller said the US was “within striking distance” of the Fed’s goal of 2% inflation, but the central bank should not rush towards cuts in its benchmark interest rate until it is clear lower inflation will be sustained.

The Fed is widely expected to hold its policy rate steady at the end of its January 30-31 meeting. Traders see a 67% chance of an interest rate cut in March, according to the CME Fedwatch tool.

Elsewhere, European Central Bank (ECB) officials also pushed back against market expectations for rapid rate cuts this year.