Gold prices edged lower on Wednesday after gaining 1.6% in the previous session. Softer oil prices helped ease some inflation concerns, but elevated US Treasury yields continued to pressure bullion.
XAU/USD slipped 0.12% to $4,177.63 an ounce, while gold futures rose 0.7% to $4,209.65.
Silver fell 0.6% to $61.32, while platinum declined 0.3% to $1,707.25. The US Dollar Index remained broadly unchanged near 101.38.
Lower Oil Prices Ease Inflation Concerns
Oil prices extended their decline as signs emerged that Middle East supply conditions were beginning to improve.
Saudi Arabia increased flows through a key pipeline following repairs. The move helped reduce some concerns linked to the ongoing disruption around the Strait of Hormuz.
Those concerns had pushed energy prices sharply higher earlier in the week.
Despite the latest pullback, Brent crude remains roughly 70% higher this year as the Middle East conflict approaches its eighth month.
Lower oil prices have reduced some pressure on the inflation outlook. However, uncertainty over energy supplies remains an important factor for investors assessing the Federal Reserve’s next policy moves.
US Inflation and Jobs Data Take Center Stage
Markets are now turning their attention to key US economic data.
The Personal Consumption Expenditures inflation report, the Federal Reserve’s preferred inflation gauge, is due on Wednesday.
Investors will then focus on Friday’s nonfarm payrolls report for further clues about the future path of US interest rates.
Both releases could have a significant impact on gold prices, Treasury yields and the US dollar.
Treasury Yields Continue to Pressure Gold
High US Treasury yields remain one of the biggest headwinds for gold.
The yield on the longest-dated US Treasury climbed for a sixth consecutive session on Tuesday, reaching its highest level since 2002.
Investors are increasingly considering whether persistent energy costs could keep inflation elevated and force the Federal Reserve to raise interest rates further.
Higher bond yields typically weaken demand for gold because the precious metal does not offer interest income.
Fed Officials Keep Rate Hike Risks Alive
Federal Reserve officials have continued to signal that monetary policy may need to remain restrictive.
The central bank raised interest rates in September for the first time since 2023, but policymakers have suggested that additional tightening could still be considered.
New York Fed President John Williams said on Tuesday that another interest rate increase later this year could be appropriate.
However, traders reduced the implied probability of an October Fed rate hike to around 50% from 70%.
Williams pointed to the Middle East conflict and the rapid growth of artificial intelligence infrastructure as possible sources of inflation pressure.
Several other Fed officials also discussed the possibility of higher interest rates during separate appearances on Tuesday.
Gold Heads for Monthly Loss
Gold remains on course to finish September nearly 6% lower.
High Treasury yields, concerns over inflation and expectations for tighter Federal Reserve policy have weighed on the precious metal throughout the month.
Energy prices have also contributed to broader inflation concerns, making interest-rate expectations a key driver for gold heading into the next set of US economic data.
