Gold Prices Edge Lower as Rising Oil and Treasury Yields Weigh on Bullion
Gold prices slipped on Thursday following a sharp selloff in the previous session, as higher oil prices, a stronger U.S. dollar, and rising Treasury yields continued to pressure the precious metal. Investors are also reassessing the likelihood of further Federal Reserve interest rate hikes amid persistent inflation concerns.
As of 12:58 WIB, spot gold (XAU/USD) was down 0.2% at $4,281.13 per ounce, while U.S. gold futures declined 0.1% to $4,315.55. Silver fell 0.6% to $64.09 per ounce, while platinum gained 0.3% to $1,758.69 and palladium advanced 0.4% to $1,273.79. The U.S. Dollar Index remained largely unchanged at 101.13.
Oil Prices Rise as Iran Tensions Cloud Peace Prospects
Gold remains highly sensitive to Federal Reserve policy expectations, with investors closely monitoring whether elevated energy prices could keep inflation high enough to justify additional interest rate increases. Higher rates typically weigh on gold because the metal does not generate yield.
Oil prices moved higher after Iranian President Masoud Pezeshkian told the United Nations that Iran would not allow unrestricted navigation through the Strait of Hormuz while U.S. sanctions and blockades remain in place.
His remarks highlighted the challenges facing diplomatic efforts between Tehran and Washington, despite renewed negotiations taking place this week.
Pezeshkian reiterated that Iran remains open to negotiations but would not respond to threats. He also stated that Tehran is not pursuing nuclear weapons while emphasizing that the country will not abandon its right to develop nuclear technology for economic purposes.
The comments came a day after U.S. President Donald Trump said American officials had held “very good” discussions with Iranian representatives on the sidelines of the United Nations summit.
Gold has fallen roughly 20% since the outbreak of the U.S.-Iran conflict in late February, with energy prices and Federal Reserve policy expectations remaining the primary drivers of market sentiment.
Strong U.S. Data and Treasury Selloff Reinforce Rate Pressure
The U.S. Treasury market remained under pressure following stronger-than-expected economic data and weak government debt auctions. The move has strengthened expectations that inflation could remain elevated, pushing yields across much of the curve to their highest levels in nearly two decades.
The benchmark U.S. five-year Treasury yield climbed above 5% for the first time since 2007, creating an additional headwind for non-yielding assets such as gold.
Meanwhile, U.S. business activity expanded at its fastest pace in more than five years. Federal Reserve Governor Michael Barr indicated that further interest rate increases may be necessary to bring inflation back to the central bank’s 2% target. His comments echoed similar warnings from other policymakers who continue to view inflationary pressures as persistent.
Interest-rate swaps now suggest markets are pricing in at least three additional Federal Reserve rate hikes by April next year, a notable increase from expectations earlier this week.
Gold Outlook Remains Challenging
Despite near-term weakness, gold continues to receive support from long-term demand fundamentals. However, stronger economic growth, rising Treasury yields, elevated oil prices, and a firmer U.S. dollar are currently limiting the precious metal’s upside potential and keeping pressure on bullion prices in the short term.