Gold prices remained under pressure on Wednesday, hovering near their lowest level in more than three weeks as a stronger US dollar and rising Treasury yields increased expectations of another Federal Reserve rate hike.
Renewed tensions between the United States and Iran also pushed energy prices higher, adding to concerns that inflation could remain elevated.
Gold Holds Near a Three-Week Low
At 07:42 ET, spot gold was little changed at around $4,327.56 per ounce.
Gold futures fell approximately 0.5% to $4,373.00.
Silver rose 0.2% to about $64.22 per ounce, while platinum declined 0.5% to around $1,736.90.
Meanwhile, the US Dollar Index gained roughly 0.1% to 99.73.
Gold Extends Its Losing Streak
Gold has now declined for four consecutive sessions after retreating from last week’s high near $4,700.
The metal has been pressured by a combination of higher bond yields, stronger oil prices and a firmer US dollar.
These factors have increased expectations that the Federal Reserve may keep monetary policy tighter for longer.
US-Iran Tensions Add to Inflation Concerns
The latest pressure followed a new round of US strikes against targets in Iran on Tuesday.
Iran said it responded with retaliatory action, marking another escalation after several weeks of relative calm.
The renewed conflict raised concerns about energy supplies and the possibility of further disruption in the Middle East.
Oil Prices Remain Near Recent Highs
Brent crude traded near $94 per barrel, while US crude slipped below $90.
Although prices moved slightly lower during the session, they remained close to recent highs.
Investors continue to monitor the risk that a prolonged US-Iran conflict could disrupt oil shipments through the Strait of Hormuz.
That route remains one of the most important passages for global energy supplies.
Higher Oil Prices Could Keep Inflation Elevated
Rising energy prices matter for gold because they can contribute to higher consumer inflation.
If inflation remains stubbornly high, the Federal Reserve could face additional pressure to raise interest rates.
Markets are now pricing in close to a 70% probability of a Fed rate hike at the September 15-16 policy meeting.
Higher interest rates tend to weigh on gold because the metal does not generate income or yield.
Fed Officials Maintain a Hawkish Tone
Expectations for tighter monetary policy increased after Federal Reserve Chair Kevin Warsh delivered a hawkish message at Jackson Hole.
Several other Fed officials have also warned that inflation could remain persistent.
Fed Governor Michael Barr said policymakers should be prepared to raise interest rates if inflation fails to ease.
He also warned that inflation pressures could become increasingly entrenched after remaining above the Fed’s target for several years.
Global Bond Selloff Pushes Yields Higher
Inflation concerns are also affecting global bond markets.
Long-term US Treasury yields have returned to levels seen before the Treasury’s intervention last month.
Thirty-year Treasury yields climbed above 5.28% on Tuesday.
That brought them back toward levels seen before Treasury Secretary Scott Bessent announced an expansion of bond buybacks on August 19.
Treasury Intervention Impact Begins to Fade
The Treasury’s earlier action had initially helped lower yields and improve liquidity conditions.
However, much of that impact has now been reversed.
Bond yields have increased across several major economies, with global yields reaching their highest levels since 2008.
The rise in yields has strengthened the US dollar, creating another obstacle for gold prices.
Stronger Dollar Creates Another Headwind for Gold
Gold is priced in US dollars, meaning a stronger dollar makes the metal more expensive for buyers using other currencies.
As a result, rising dollar strength can reduce international demand for gold.
The combination of higher yields and a firmer dollar has therefore weakened some of the momentum that drove gold sharply higher in August.
Gold Gained Nearly 10% in August
Despite the recent decline, gold delivered a strong performance during August.
The metal gained nearly 10% during the month, marking its strongest monthly advance since January.
That rally accelerated after the US Treasury increased its bond-buyback activity.
The move also revived interest in the so-called debasement trade, which reflects investor concerns about rising government debt and the long-term value of fiat currencies.
ANZ Still Sees Support From the Debasement Trade
ANZ said the Treasury’s earlier liquidity measures encouraged investors to increase their exposure to gold.
However, the recent rebound in bond yields and the US dollar has slowed that momentum.
Even so, ANZ believes longer-term concerns over sovereign debt and currency depreciation could continue supporting demand for gold.
Gold Breaks Below Key Technical Level
Gold has also suffered technical damage in recent sessions.
The metal fell below its 200-day moving average, a closely watched indicator of long-term market momentum.
A sustained break below this level can sometimes be interpreted as a sign that the broader trend is weakening.
Traders will now be watching whether gold can recover above the moving average or whether additional selling pressure develops.
Gold Outlook Hinges on Fed Policy and Geopolitical Risk
Gold remains caught between competing forces.
Geopolitical tensions and concerns about debt and currency depreciation continue to provide longer-term support.
However, rising Treasury yields, a stronger US dollar and growing expectations for another Federal Reserve rate hike are creating significant short-term pressure.
The next direction for gold may depend heavily on inflation data, Fed policy expectations and developments in the US-Iran conflict.
