Gold prices moved lower on Tuesday as rising U.S. Treasury yields and stronger oil prices reduced demand for bullion, while investors awaited the minutes from the Federal Reserve’s July policy meeting for further indications on the outlook for interest rates.
At 02:26 ET (06:26 GMT), XAU/USD fell 0.5% to $4,395.78 an ounce, while Gold Futures declined by the same amount to $4,451.07. XAG/USD dropped 0.8% to $65.24 an ounce and XPT/USD lost 0.7% to $1,760.90. The US Dollar Index gained 0.1% to 99.67.
Softer Economic Data Reduces Expectations for Fed Rate Increase
Gold surrendered part of its recent advance as the benchmark 10-year U.S. Treasury yield continued to climb, making non-yielding assets such as bullion relatively less attractive.
Oil prices also strengthened after Iran warned that it would move to a “fully offensive” military posture if diplomatic efforts with the United States failed, while Washington ruled out extending the temporary ceasefire.
Renewed instability in the Middle East has kept energy markets volatile and raised concerns that sustained increases in crude prices could generate additional inflationary pressure.
Interest-rate swaps no longer fully price in another Federal Reserve rate increase before the end of 2026. That represents a shift from last week, when markets had anticipated another increase before year-end.
Higher energy costs can feed through to inflation expectations and potentially encourage the Fed to maintain restrictive monetary policy for longer. Although gold is traditionally regarded as a hedge against inflation, elevated interest rates can undermine its appeal because the metal produces no income.
At the same time, expectations for a September rate increase have fallen substantially following unexpected job losses in July, weaker-than-forecast consumer inflation and softer retail sales. Current market pricing suggests around a 65% probability that the Fed will leave rates unchanged in September.
Fed Minutes Could Provide Fresh Direction for Gold
Attention is now turning to Wednesday’s publication of minutes from the Federal Reserve’s latest policy meeting, which could provide more detail on policymakers’ assessment of inflation and the appropriate trajectory for interest rates.
Gold’s recovery above the important $4,000-an-ounce threshold in recent weeks has been supported by renewed investor interest and stronger central-bank purchases, particularly from China.
The precious metal also climbed above its 100-day moving average last week for the first time since April, although it has subsequently moved back around that technical level.
Despite the latest decline, the broader technical picture remains relatively constructive as long as gold stays above the late-June low near $3,942.
Key Resistance Levels Remain a Challenge
Gold is currently below the $4,440-$4,450 zone, which represents downtrend resistance extending from the record high of around $5,602 reached in late January.
The 200-day moving average at approximately $4,503 represents another significant technical hurdle.
A sustained move through both resistance areas could reinforce expectations of a wider recovery towards $5,000. Failure to overcome them, however, could leave bullion vulnerable to another period of consolidation.
Central-Bank Demand Supports Longer-Term Outlook
ANZ continues to see structural support for gold from central banks seeking greater diversification of their reserves.
Global central-bank gold purchases reached 244 tonnes during the first quarter of 2026, the highest quarterly amount since the final quarter of 2024. China subsequently purchased another 8 tonnes in April, its largest monthly addition since December 2024.
ANZ expects worsening international relations to keep reserve diversification an important source of demand and forecasts that gold could reach $5,200 an ounce by the end of the year.