Gold dropped 0.5% to $4,395.78 an ounce on Tuesday as rising Treasury yields and higher oil prices weighed on the metal. Traders are now waiting on Wednesday's Federal Reserve minutes for direction on the rate path, while a Middle East flare-up added to the pressure on bullion.
The pullback came as the 10-year U.S. Treasury yield extended its rise, increasing the opportunity cost of holding the non-yielding metal. Gold futures declined 0.5% to $4,451.07, while silver slipped 0.8% to $65.24 an ounce and platinum fell 0.7% to $1,760.90. The Dollar Index rose 0.1% to 99.67.
Oil rally adds to inflation worries
Oil prices moved higher after Iran said it would adopt a fully offensive military posture should diplomatic efforts with the United States fail, while Washington ruled out extending the temporary ceasefire. The renewed Middle East uncertainty has kept energy markets volatile and added to concerns that higher oil prices could reignite inflation pressures. Higher energy costs can feed inflation expectations, therefore increasing the likelihood the Fed keeps rates elevated.
Rate-hike bets fade as Fed outlook shifts
Interest-rate swaps no longer fully price another Fed rate increase before year-end, a shift from last week when markets had priced in another rate hike by year-end. Although gold is often used as an inflation hedge, higher borrowing costs tend to reduce its appeal because bullion generates no income. Markets have sharply reduced expectations for a September rate hike after July's unexpected job losses, softer-than-expected consumer inflation, and weaker retail sales. Pricing now implies roughly a 65% probability the Fed holds rates steady in September. Investors are also awaiting Wednesday's release of minutes from the Fed's latest policy meeting for further clues on the rate outlook.
Central-bank buying keeps the longer-term case intact
Gold's recovery above $4,000 an ounce in recent weeks has been supported by renewed investor demand and increased central-bank buying, particularly from China. The metal is now trading below the $4,440-$4,450 area that marks downtrend resistance from its late-January record near $5,602, while the 200-day moving average around $4,503 remains the next barrier. A sustained break above both zones would strengthen the case for a recovery toward $5,000, while failure to clear them would leave gold vulnerable to further consolidation.
ANZ points to longer-term support from central-bank diversification: global central-bank gold purchases reached 244 tonnes in the first quarter of 2026, the highest quarterly total since Q4 2024, while China added eight tonnes in April, its largest monthly purchase since December 2024. The bank expects deteriorating international relations to keep diversification demand relevant and forecasts gold reaching $5,200 an ounce by year-end.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
