Spot gold edged up 0.6% to $4,139.91 an ounce on Tuesday, after a 4% plunge the previous session. The metal stays near a seven-week low as rising Treasury yields and bets on another Fed rate hike keep pressure on the non-yielding asset, while an Iran-driven oil rally adds to inflation worries.
Spot gold rose 0.6% to $4,139.91 an ounce at 09:33 GMT on Tuesday. Gold futures ticked up 0.1% to $4,171.90 an ounce, but the metal remains not far from a seven-week low.
Fed rate-hike bets keep pressure on gold
Over the past month, gold has fallen about 7%.
The decline comes amid the Fed's first interest rate increase since 2023, alongside policymakers leaving open the possibility of further hikes. Markets now see around a 70% probability of another rate increase in October.
Analysts at ANZ said the near-term macroeconomic backdrop remains difficult for gold, as higher yields and inflation risks weigh on the metal.
Treasury selloff adds to the drag
The renewed rise in oil prices also intensified the selloff in the U.S. Treasury market on Monday, further threatening gold's appeal. The 10-year Treasury yield climbed to a fresh 19-year high, increasing the cost of holding gold, which does not generate interest income. The yellow metal slumped 4% on Monday.
Iran standoff keeps oil, inflation risks elevated
Oil prices extended gains as Iran remained firm on its conditions for reopening the Strait of Hormuz. Elevated oil prices have stoked worries about inflationary pressure and a cycle of central bank tightening, which can weigh on the appeal of non-yielding assets like gold.
Iranian officials have reportedly expressed pessimism about reaching an agreement with Washington to end hostilities before the U.S. midterm elections in November, after President Donald Trump rejected Tehran's latest proposal to reopen the waterway within seven days. The U.S.-Iran conflict is now in its eighth month.
What comes next
Markets will next focus on Wednesday's personal consumption expenditures inflation data, the Fed's preferred inflation gauge, and Friday's nonfarm payrolls report for fresh clues on the path of interest rates.
Source: Commodities & Futures News
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