Gold prices moved lower on Tuesday, falling back below $4,300 an ounce as a stronger U.S. dollar and elevated Treasury yields continued to pressure bullion.
The decline followed a drop of more than 1% in the previous session, with investors now focused on the Federal Reserve’s upcoming interest rate decision.
At 02:16 ET, spot gold traded 0.2% lower at $4,290.39 an ounce. Gold futures fell 0.5% to $4,330.57.
Silver also declined, with XAG/USD down 0.2% to $63.12 an ounce. Platinum moved in the opposite direction, rising 0.2% to $1,769.49.
Meanwhile, the U.S. Dollar Index gained 0.2% to 99.63.
Stronger Dollar and Higher Yields Pressure Gold
Gold has faced renewed selling pressure after falling to a five-week low on Monday.
Higher oil prices, rising Treasury yields, and a firmer U.S. dollar have all weighed on the precious metal.
These factors have also strengthened expectations that the Federal Reserve could raise interest rates.
Markets are currently pricing in roughly a 92% probability of a Fed rate hike this week.
Higher interest rates are generally negative for gold because the metal does not generate interest or yield. As borrowing costs rise, income-producing assets can become relatively more attractive to investors.
Oil Disruptions Increase Inflation Concerns
Rising energy prices have become another important factor for the gold market.
Oil prices climbed after Saudi Arabia shut down its East-West pipeline following attacks during the previous week.
The disruption has put millions of barrels of daily supply at risk. The pipeline had been helping move crude around instability in the Strait of Hormuz at a time when global markets were already searching for additional supplies.
Saudi Arabia has not confirmed how long the shutdown could last.
It also remains unclear how quickly the country could increase shipments through the Strait of Hormuz to compensate for reduced pipeline flows.
Treasury Yields Rise as Inflation Risks Build
Higher energy costs have increased concerns that inflation could remain elevated for longer.
Those fears have pushed U.S. Treasury yields higher.
The 10-year U.S. Treasury yield briefly reached 5% on Monday, marking its highest level in almost three years.
The move reflected both inflation concerns and expectations for increased government and corporate borrowing.
Higher Treasury yields can place additional pressure on gold because they increase the opportunity cost of holding non-yielding assets.
Gold Price Down More Than 3% in September
Gold has now fallen by more than 3% during September.
The metal had traded above $4,600 an ounce in late August before retreating as investors repeatedly adjusted expectations for Federal Reserve policy.
The recent move below $4,300 highlights how sensitive gold prices remain to changes in interest rate expectations, bond yields, and the U.S. dollar.
Long-Term Gold Demand Remains Supportive
Despite the short-term weakness, the longer-term outlook for gold remains relatively constructive.
Investors continue to view bullion as a portfolio hedge, particularly during periods of elevated economic, geopolitical, and inflation uncertainty.
OCBC has raised its precious metals forecasts, citing stronger price momentum, improving investment demand, and supportive structural trends.
Chez Anbu, head of wealth advisory at OCBC, said gold’s strong rebound in August reversed some of the weakness seen earlier as the broader macroeconomic environment became more supportive.
OCBC Forecasts Gold at $4,600
OCBC now expects gold to reach $4,600 an ounce by December 2026.
The bank also forecasts silver at $69.70 an ounce.
Gold remains comfortably above the $4,000 level that acted as an important floor during the previous correction.
Although the near-term outlook remains pressured by higher yields, a stronger dollar, and Fed rate hike expectations, longer-term investment demand continues to support the broader gold market outlook.
