Gold Extends Falls on Rising Treasury Yields
By Praisebell Rosemond Larbi
Gold prices continued their downward trend on Tuesday, slipping for a third consecutive session as rising U.S. Treasury yields increased the opportunity cost of holding non-yielding assets, even as geopolitical tensions in the Middle East and shifting interest rate expectations shaped broader market sentiment.
Spot gold fell 0.2 percent to $4,319.98 per ounce by 0100 GMT, after touching a more than two-month low in the previous session. U.S. gold futures for August delivery also eased 0.4 percent to $4,344.30.
The decline comes amid a rise in yields on the benchmark 10-year U.S. Treasury note, which climbed to a two-week high. Higher yields typically weigh on gold by making interest-bearing assets more attractive to investors.
Geopolitical developments provided some counterbalance to market pressure, as Iran and Israel reportedly agreed to halt attacks following an appeal from U.S. President Donald Trump. However, tensions remain fragile, with Tehran warning it could resume hostilities if strikes continue against Hezbollah positions in Lebanon.
Despite the temporary easing of conflict risks, inflation concerns and monetary policy expectations continue to influence investor positioning in precious metals.
Investment bank Goldman Sachs projects that the U.S. Federal Reserve will keep interest rates unchanged through 2026, delaying rate cuts until 2027, citing resilient economic activity and strong labour market performance.
Market pricing reflects shifting expectations, with traders now assigning more than a 70 percent probability of a Federal Reserve rate hike by December, according to the CME FedWatch tool.
Meanwhile, Citigroup revised its near-term gold price outlook downward, cutting its forecast to $4,000 per ounce from $4,300. The bank noted that higher U.S. interest rates are likely to limit gold’s upside potential, adding that recent price strength may be difficult to sustain without stronger physical demand.
ETF flows also showed weakening investor appetite. The SPDR Gold Trust reported a 0.5 percent decline in holdings to 929.62 metric tons, signaling mild outflows from bullion-backed investment products.
In other precious metals, spot silver fell 0.6 percent to $67.84 per ounce, platinum slipped 0.2 percent to $1,750.33, while palladium edged higher by 0.6 percent to $1,211.
Markets now await a series of economic data releases, including German industrial output and U.S. housing and trade figures, which are expected to provide further direction on global growth trends and interest rate expectations.
Overall, analysts say gold remains caught between geopolitical risk support and persistent pressure from higher yields and evolving central bank policy outlooks, keeping prices volatile in the near term.
