Gold prices opened lower on Thursday, June 1, 2023, as investors weighed the impact of rising interest rates on the yellow metal’s appeal as a safe haven.

Spot gold was down 0.2% at $1,962.32 per ounce by 0206 GMT, after falling to its lowest since May 12 at $1,957.10 earlier in the session.

U.S. gold futures fell 0.3% to $1,963.70.

“Gold is still in a downtrend and could test the May lows at $1,948,” said Jeffrey Halley, senior market analyst at OANDA.

“The main driver for gold is the rising U.S. dollar and rising real yields, which are making gold less attractive as an alternative asset.”

The U.S. dollar index was up 0.1%, making gold more expensive for holders of other currencies.

Benchmark 10-year Treasury yields were up 1 basis point at 3.05%.

Gold is often seen as a hedge against inflation and economic uncertainty. However, rising interest rates tend to weigh on gold prices, as they make the metal less attractive as an investment.

Gold is also facing headwinds from a stronger U.S. dollar, which makes it more expensive for foreign buyers.

Despite the recent weakness, gold is still up about 1% this year.

Analysts say that gold could find support at $1,950 per ounce and could rebound if the U.S. dollar weakens or if there is a renewed bout of risk aversion in the markets.