On Wednesday, gold prices fell as U.S. Treasury yields recovered after dropping off the 3% level in the previous session. Higher yields raised the opportunity cost of holding the non-interest-bearing metal.

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 In addition, the dollar climbed back up close to two-year peaks after slipping 0.3% in the last session. And a strong dollar made the yellow metal more expensive for investors using rival currencies.

Spot gold is currently trading at $1,863.10 per ounce as of 0701 GMT.

Another factor working against gold is the Federal Reserve’s rate hike announcement later today. The market expects a 50 basis-point interest-rate hike and details on the Fed’s reduction of its $8.9 trillion balance sheet.

OANDA senior analyst Jeffrey Halley commented that the market already priced in a 50-basis-point rate hike. He believes that a more hawkish Fed statement would put more pressure on gold. But if the central bank guidance remains unchanged, it could push the dollar down and push the bullion up to $1,880.

The only positive development for gold is Russia’s intensified attacks on Ukraine ahead of fresh European Union (EU) sanctions. Russian forces used their heaviest firepower on the east and south of Ukraine to block its access to the Black Sea.

European Commission head of foreign policy Josep Borrell said they are working on the sixth package of sanctions against Moscow. It includes an oil embargo and the delisting of more Russian banks from the SWIFT messaging system. The latest round of sanctions would affect Russia’s top lender Sberbank.

DailyFX strategist Michael Boutros said gold’s decline exposed major long-term trend support and advised traders to watch out for possible exhaustion low. He noted that gold trades within the confines of a modified pitchfork formation. Boutros suggested that a breach of the median line would lead the bullion back towards downtrend resistance. He also mentioned that the IG Client Sentiment Index indicates that gold prices may continue to fall.

FXStreet senior analyst Dhwani Mehta added gold price remains vulnerable after yesterday’s dead cat bounce. She explained that the dollar would likely jump higher on an aggressive Fed stance. Mehta also said the technical setup favors the bears. Specifically, the 14-day Relative Strength Index is sliding down towards the oversold region. That would bring prices down back to Tuesday’s low of $1,850.