Gold Slips for Third Session as Treasury Yields Climb

Gold prices faced downward pressure for the third consecutive day this Tuesday as investors reacted to rising U.S. Treasury yields. The benchmark 10-year Treasury note reached a two-week high, making non-yielding assets like bullion less attractive to investors looking for steady returns.

At 0100 GMT, spot gold dropped 0.2% to $4,319.98 per ounce, following a trend that saw the metal hit its lowest point in more than two months on Monday. Meanwhile, U.S. gold futures for August delivery slipped 0.4% to $4,344.30.

Market sentiment remains clouded by persistent geopolitical tensions in the Middle East, which continue to fan fears regarding global inflation and potential interest rate hikes. While Iran and Israel indicated a pause in direct hostilities following an appeal from U.S. President Donald Trump, Tehran has warned of a possible resumption if conflicts in Lebanon persist.

Economic forecasts are also impacting trader confidence. Goldman Sachs recently noted that it expects the U.S. Federal Reserve to maintain current interest rates throughout 2026, pushing potential cuts into 2027 due to robust economic activity and steady jobs growth.

Current market expectations reflect this outlook:

• Traders now estimate a probability exceeding 70% that the Federal Reserve will implement a rate hike by December.
• Citi has downgraded its near-term price target for gold from $4,300 to $4,000 per ounce, citing the likelihood of higher interest rates.
• The bank further noted that bullion’s recent performance struggles to find support without consistent, strong physical demand.
• Institutional selling has also been observed, as evidenced by a 0.5% decrease in holdings by the SPDR Gold Trust, which now sits at 929.62 metric tons.

The broader precious metals market followed gold’s lead, with spot silver dipping 0.6% to $67.84 per ounce and platinum falling 0.2% to $1,750.33. In contrast, palladium showed some resilience, rising 0.6% to $1,211 per ounce.

Investors are now turning their attention to upcoming economic indicators, including German industrial production data and U.S. trade and existing home sales figures, to gauge the next direction for the market.

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