Story
Gold Recovers Slightly After 4% Plunge as Traders Await Key US Economic Data
Summary
Gold prices edged higher on Tuesday but remained near a seven-week low following a sharp sell-off, as rising Treasury yields and expectations of further Federal Reserve interest rate hikes continued to weigh on the metal. Markets are now focused on upcoming U.S. inflation and jobs reports for policy clues.
Gold prices posted a modest rebound on Tuesday after plunging 4% in the previous session, though the precious metal continued to trade near a seven-week low. The slight recovery comes as investors weigh persistent inflationary pressures against the prospect of a more aggressive Federal Reserve, with key U.S. economic data looming later in the week.
As of 9:33 AM ET, spot gold was up 0.9% to $4,153.57 per ounce, while gold futures rose 0.4% to $4,186.55 per ounce, according to data from Investing.com.
Rising Yields and Oil Prices Pressure Bullion
The primary headwind for gold has been a sharp rise in U.S. Treasury yields. The 10-year Treasury yield climbed to a 19-year high, significantly increasing the opportunity cost of holding non-yielding assets like gold. This surge in yields was partly driven by elevated energy prices, which are stoking fears of persistent inflation.
International oil prices have been pushed higher by an ongoing stalemate between the U.S. and Iran over the reopening of the Strait of Hormuz, a critical waterway for global energy supplies. The concern is that sustained high oil prices could force central banks, including the Fed, to maintain a hawkish monetary policy stance, further diminishing gold's appeal.
AdFed Outlook and Market Focus
The precious metal has fallen approximately 7% over the past month, a decline that accelerated after the Federal Reserve delivered its first interest rate hike since 2023 and signaled that further increases were possible. According to the source, markets are currently pricing in a roughly 70% probability of another rate hike in October.
Analysts at ANZ noted that the macroeconomic environment for gold remains challenging due to the combination of rising yields and inflation risks. Looking ahead, traders are bracing for two critical data releases that will heavily influence the Fed's next steps:
- Personal Consumption Expenditures (PCE) inflation data on Wednesday, the Fed's preferred inflation gauge.
- The Non-Farm Payrolls report on Friday, which will provide a snapshot of the U.S. labor market.
Read next
More on Commodities
Brent Crude Surpasses $106 as Trump Rejects Iran's Hormuz Reopening Proposal
Oil prices climbed after U.S. President Donald Trump rejected a seven-day proposal from Iran to reopen the Strait of Hormuz, prolonging a standoff that has pushed the global benchmark up over 70% this year.
Oil Prices Jump Over 2% as Iran Holds Firm on Strait of Hormuz Reopening Terms
Crude oil futures surged after Iran reiterated its conditions for reopening the vital Strait of Hormuz shipping lane, fueling uncertainty over global supplies despite a U.S. rejection of the proposal.
Gold Prices Fall Below $4,200 as Surging Oil, Fed Rate Hike Bets Weigh
Gold prices extended their decline on Monday, dropping over 2% as rising oil prices fueled inflation fears and strengthened expectations for further U.S. Federal Reserve interest rate hikes.
Copper Prices Fall to One-Week Low on Weak China Data, Stronger Dollar
Copper futures declined to their lowest level in over a week, pressured by slowing industrial profit growth in top consumer China and a strengthening U.S. dollar, which raised concerns about global demand.