Gold prices moved sharply lower on Tuesday as renewed tensions in the Middle East pushed oil prices higher and intensified a global bond sell-off.
At the same time, investors increased expectations that the Federal Reserve could raise interest rates at its September meeting.
At 10:26 ET, XAU/USD was down around 2% near $4,360 an ounce. Gold futures fell roughly 1.6% to about $4,409.
Silver also came under pressure, with XAG/USD dropping 2.6% to around $64.85 an ounce. Platinum declined approximately 1.9% to $1,762.70.
Meanwhile, the U.S. Dollar Index gained around 0.2% to 99.55.
JOLTS Data Shows Resilient U.S. Labor Market
Fresh U.S. labor market data provided another important signal for Federal Reserve policy.
Job openings increased to 7.27 million in July from a revised 7.18 million in June, according to the Labor Department’s JOLTS report.
However, the figure came in below economists’ expectations of 7.33 million.
The data suggested that the U.S. labor market remains relatively resilient, although it did not deliver a significant upside surprise.
Gold Extends Sharp Retreat From Recent High
Gold has now fallen by roughly $320 from last week’s high near $4,697.
The latest decline came as both crude oil prices and government bond yields moved sharply higher.
Gold had already fallen more than 3% on Friday after Federal Reserve Chair Kevin Warsh reinforced the central bank’s commitment to returning inflation to its 2% target.
His comments encouraged markets to reassess the outlook for U.S. interest rates.
Fed Rate Hike Expectations Increase
Investors are now assigning a much higher probability to another Federal Reserve rate increase.
According to the CME FedWatch tool, markets are pricing roughly a 66% chance of a 25-basis-point rate hike at the September meeting.
That compares with around 40% before Warsh’s Jackson Hole speech.
Higher interest rates generally create pressure on gold because the precious metal does not pay interest. Rising yields can therefore make government bonds and other yield-bearing assets more attractive to investors.
U.S.-Iran Tensions Push Oil Prices Higher
Geopolitical risks are also complicating the outlook for gold.
Renewed fighting between the United States and Iran has increased concerns about potential disruptions to global energy supplies.
Brent crude moved above $92 per barrel, while U.S. crude climbed above $87.
Higher oil prices can contribute to stronger inflation by increasing transportation, manufacturing and energy costs.
That, in turn, could give the Federal Reserve another reason to maintain a restrictive monetary policy stance.
Treasury Yields Add Pressure to Gold
The U.S. 10-year Treasury yield climbed to around 4.78%, reaching its highest level since early 2025.
A wider global bond sell-off has also driven borrowing costs higher across several major economies.
Tony Sycamore, senior market analyst at IG, said the combination of Warsh’s hawkish Jackson Hole speech and renewed tensions around the Strait of Hormuz had helped drive gold’s roughly $300 decline from last week’s peak.
He said rising oil prices and higher bond yields have left gold vulnerable ahead of the Federal Reserve’s next policy meeting.
Markets are currently pricing around 60 basis points of additional rate increases through June 2027, according to Sycamore.
Broader Gold Rally Remains Intact
Despite the latest sell-off, gold is still coming off a strong August performance.
The metal gained nearly 10% during the month after the U.S. Treasury unexpectedly increased purchases of longer-dated government debt.
That move helped push borrowing costs lower and weakened the dollar.
It also revived concerns about rising U.S. government debt and the longer-term risk of currency devaluation.
Debasement Trade Continues to Support Gold
Concerns over government deficits and weaker currencies have helped revive the so-called debasement trade.
This investment theme contributed to gold’s strong rally during 2025, when the metal gained roughly 65%.
Investors increasingly turned to gold as a potential hedge against large government deficits, currency weakness and long-term inflation risks.
Gold-backed exchange-traded funds also recorded strong inflows, while central bank purchases provided another important source of demand.
Gold Remains Below Key Technical Level
The short-term outlook has become more challenging following the recent decline.
Gold remains below its 200-day moving average, which was positioned near $4,526 after prices broke beneath the level following Warsh’s speech.
Sycamore said the technical break has not changed his medium-term bullish outlook.
He continues to view the late-June low near $3,942 as an important base and favors buying significant pullbacks.
His longer-term upside target remains around $5,000.
Nonfarm Payrolls Could Drive Gold’s Next Move
Investors will now focus on upcoming U.S. employment data for further clues about Federal Reserve policy.
The ADP employment report will provide another snapshot of labor market conditions.
However, Friday’s nonfarm payrolls report is likely to attract the most attention.
A stronger-than-expected jobs report could reinforce expectations for higher interest rates and place additional pressure on gold.
In contrast, signs of labor market weakness could reduce Fed rate hike expectations and potentially provide support for precious metals.
