Gold prices continued to ease from multi-month highs amid a revival in the dollar as investors weighed the prospect of global monetary policy tightening after the Bank of Japan trimmed its bond purchases.

Gold futures for February delivery on the Comex division of the New York Mercantile Exchange fell by $6.80 or 0.51%, to $1,313.50 a troy ounce.

Gold prices retreated further from four-month highs on Tuesday as treasury yields surged, supporting dollar strength amid growing expectations for global monetary policy tightening after the Bank of Japan’s cut its purchases of long-term bonds.

In a rising interest rate environment, investor appetite for gold weakens as the opportunity cost of holding the precious metal increases relative to other interest-bearing assets such as bonds.

Also supporting the dollar strength was a drop in safe-haven demand as global equity markets continued to top multi-year highs amid ongoing risk-on sentiment.

Some market participants suggested that gold could retreat further toward its 100-day moving average around $1,290. Recent data, however, pointed to ongoing support for gold as hedge funds and speculators increased their bullish bets on the precious metal.

The net long position in Comex gold futures and options - the difference between bets on rising and falling prices – rose nearly 40% to 152,650 contracts, the Commodity Futures Trading Commission (CFTC) reported Friday.

Despite the prospect of global monetary tightening from the Federal Reserve, Bank of England and Bank of Canada this year, BofA Merrill Lynch said it expects gold prices to rise to $1,350 an ounce by the third quarter of the year.

The Bank of Canada could raise rates as soon as next week, Action Economics said, as the recent swathe of positive labor market data may force the central bank’s hand on monetary policy tightening.

Nomura’s George Buckley – who correctly predicted that the Bank of England would hike interest rate in November – said recently that there is room for more rate hikes, estimating the Bank of England would raise rates four times by the end of 2019 to curb inflation, which is running well above target.