Gold prices sank on Tuesday, with investors gearing up for the release of minutes from the Federal Reserve’s latest policy meeting later this week.

By 05:30 ET (09:30 GMT), spot gold had fallen by 1.0% to $4,124.28 an ounce, while gold futures had dropped by 0.8% to $4,136.29 an ounce.

Denting sentiment around bullion was the U.S. dollar, which has been buoyed by an uptick in benchmark 10-year U.S. Treasury yields to a two-week high. A firmer greenback can make the yellow metal more expensive for overseas buyers.

"[Foreign exchange] volatility may stay capped ahead of tomorrow’s FOMC minutes and given a rather empty U.S. data calendar today," analysts at ING said in a note.

Much of the focus this week is on the upcoming minutes from the Fed’s June meeting. At the gathering, the central bank left interest rates unchanged at a range of 3.5% to 3.75%, although several officials projected that a borrowing cost hike may be coming this year.

Meanwhile, new Fed Chair Kevin Warsh has stressed that he does not want the Fed to offer forward guidance on rates, although did note at an event last week that inflation risks have eased.

Oil prices have retreated following an interim ceasefire deal between the U.S. and Iran in June, while payrolls data last week was softer than anticipated. How the Fed chooses to calibrate rates against this backdrop remains a key source of uncertainty, particularly for gold’s outlook. Higher rates can make non-yielding assets like the metal less attractive.

According to the CME FedWatch Tool, traders now see about a 56% chance of a rate hike as soon as September, down from 60% before the release of the employment figures.