Gold prices dropped 0.4% to $4,509.27 per ounce in early trading as traders took profits following a 3.4% jump the previous day. The decline comes amid speculation of a technical correction after Wednesday's sharp gains. Market analysts suggest the precious metal could face further pressure if U.S. Treasury yields rebound and oil prices surge.

DHF Capital's Bas Kooijman warns that gold remains vulnerable to geopolitical developments, particularly regarding U.S.-Iran negotiations. The asset manager notes that diplomatic tensions in the Middle East could significantly impact monetary policy expectations and drive volatility in gold markets. Any breakdown in talks could trigger renewed buying interest in the safe-haven commodity.

Investors are closely watching Treasury yields and oil price movements for clues about gold's next direction. The metal's sensitivity to geopolitical headlines and monetary policy shifts continues to make it a barometer for global economic uncertainty. Traders will monitor diplomatic developments and central bank communications for signals about potential price movements in the coming sessions.