Gold edged below $4,400 an ounce, as traders weighed the outlook for US inflation and interest rates while long-duration government bond yields climbed around the world.
Spot gold lost as much as 0.7 per cent on Tuesday, with a gauge of the dollar steady after hitting a three-month low on Monday. That followed a run of softer US economic data, with swaps no longer fully pricing in another Federal Reserve rate increase before the end of the year, as they were just a week ago.
The dollar weakness and lower rate-hike expectations are “potentially removing two of the headwinds that contributed to gold’s earlier correction,” Ole Hansen, head of commodity strategy at Saxo Bank AS, said in a note.
In recent weeks there has also been a resurgence of a theme that helped power gold’s rally through 2025 — that of angst over surging government spending and a flood of long-dated bond sales. Yields on 30-year US Treasuries rose to the highest since 2007 this week, while French borrowing costs hit the loftiest since 2008 and their German peers traded at 2011 levels. UK and Japanese yields also gained.
Higher yields can weigh on gold if driven by monetary tightening, making the non-yielding metal less attractive to investors. But if high long-end yields instead “reflect concerns about fiscal sustainability rather than economic strength, the historically negative relationship between gold and Treasury yields may continue to weaken,” Hansen said, creating “an unusual but potentially supportive environment for gold.”
Still, the risk of further Fed rate hikes remains, as investors await clues on the prospects for peace in the Middle East. As fighting flared again in Lebanon, US President Donald Trump said he’s not interested in extending an interim truce with Iran signed in June. Tensions remain around the Strait of Hormuz, a key shipping route that’s still disrupted due to attacks on vessels.
Traders will be studying minutes from the Fed’s July policy meeting, due for release Wednesday, for clues to the central bank’s rate path. Chairman Kevin Warsh’s remarks at the Fed’s annual Jackson Hole symposium later this month will also be closely watched.
Bullion’s recent recovery above the $4,000 threshold has been supported by renewed investor demand and a recovery in central-bank buying, notably from China. A fund manager survey by Bank of America Corp. released Tuesday showed the share of fund managers who said gold was undervalued hit the highest level since March 2023.
Spot gold slipped 0.5 per cent to $4,392.86 by 12:18 p.m. in London. Silver fell 1.1 per cent to $65.05 an ounce. Platinum and palladium retreated, while the Bloomberg Dollar Spot Index was flat after a three-day decline.
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Published on August 19, 2026
