Gold prices edged higher on Wednesday after sliding to the lowest level in 2018 earlier in the day amid surging U.S. treasury yields and a stronger dollar.

Gold futures for June delivery on the Comex division of the New York Mercantile Exchange was up $2.8, or 0.2%, to $1,293.0 a troy ounce by 12:30AM ET (04:30 GMT).

Meanwhile, the US Dollar Index that tracks the greenback against a basket of six major currencies last stood at 93.20, up 0.06%. 

The dollar hit 93.32 on Tuesday night in Asia, the highest level this year. As a full-blown trade war between the U.S. and China became less likely, investors turned to treasury yields for cues.

The United States 10-Year treasury yield further rose to 3.089 on early Wednesday morning, the highest level in 7 years. A rise in yields widened interest rate gap between the U.S. and other developed economies, increasing the dollar’s appeal.

Dollar-denominated assets such as gold are sensitive to moves in the dollar – a gain in the dollar makes gold more expensive for holders of foreign currency and thus decreases demand for the precious metal, while rising U.S. yields tend to weigh on bullion's non-yielding appeal.