Picture used for illustrative purpose. File

Gulf Today Report 

Gold prices fell on Tuesday following firmness in US dollar and Treasury yields on hope for swift economic growth.

Spot gold was down 0.3% at $1,706.43 per ounce by 05:25 GMT while US gold futures were down 0.4% at $1,707.30 per ounce.

Gold serves as a safe haven in times of economic turmoil. However, it is sensitive to rising yields because they raise the opportunity cost of holding non-yielding gold.

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According to Margaret Yang, a strategist at DailyFX this decline in gold prices, "can be attributed to reflation hopes as this infrastructure plan will not only inject liquidity into the market, it'll actually pump money into the real economy ... therefore, the economic outlook is brighter than before."

Furthermore, the dollar rose, climbing to a one-year high against the yen as investors worry about the effect of the collapsed hedge fund.

"Gold's consolidation is breaking and if downward pressure takes prices below the $1,700 level, it could get ugly fast," Edward Moya, senior market analyst at OANDA wrote in a note.