Gold prices edged higher on Tuesday as a decline in U.S. Treasury yields countered pressure on greenback-priced bullion from sustained strength in the dollar.

Spot gold was up 0.2% at $1,856.75 per ounce, as of 0213 GMT. U.S. gold futures were down 0.3% at $1,853.90. Benchmark 10-year U.S. Treasury yields extended their decline on Tuesday after pulling back from the highest level in 3-1/2 years in the previous session, lifting prices of zero-yield gold for now.

"Not only do we have a clear downtrend in gold prices at the moment, the drivers are pretty straightforward as the potential for higher rates and a stronger U.S. dollar have overwhelmed any safe-haven appeal of gold," said Michael McCarthy, chief strategy officer at Tiger Brokers, Australia.

While gold is seen as a safe store of value during times of political and economic crises, it is highly sensitive to rising short-term U.S. interest rates, which raise the opportunity cost of holding bullion.

The dollar index was steady, having risen overnight to a fresh 20-year peak. It later lost some ground after Atlanta Fed President Raphael Bostic hosed down talks of a 75-basis points at the U.S. Federal Reserve's next meeting.

This made greenback-priced and rival safe-haven bullion less attractive for other currency holders, and continued to restrain gold prices after pushing them 1% lower in the previous session.

Last week, the U.S. central bank raised its benchmark overnight interest rate by a widely expected half-a-percentage point, the biggest hike in 22 years, as it works to tighten pandemic-era monetary policy.

"We're sitting on very important support right now ... a break through $1,850 (for gold) could from a technical point of view introduce significant downside risks in the short-term," McCarthy added.

Spot silver gained 0.4% to $21.87 per ounce, while platinum dipped 0.1% to $954.98, and palladium rose 0.5% to $2,107.80.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by Sherry Jacob-Phillips)