Gold prices declined on Wednesday after hitting a seven-month low in the previous session, pressured by rising U.S. Treasury yields. Meanwhile, fading prospects for a lasting peace agreement between the United States and Iran have sustained concerns about inflation and the possibility of further interest rate hikes by the U.S. Federal Reserve.
Spot gold fell 0.7% to $3,979.41 per ounce as of 03:00 GMT.
During the previous session, gold dropped to $3,942.99 per ounce, its lowest level since November of last year.
U.S. gold futures for August delivery also declined 1.1% to $3,992.70 per ounce.
On Tuesday, gold recorded its steepest quarterly decline since 2013 and posted a fourth consecutive monthly loss in June after heightened tensions in the Middle East fueled inflation concerns and strengthened expectations of higher U.S. interest rates.
Ilya Spivak, Head of Global Macro at Tastylive, said:
“Pressure from rising bond yields appears to be driving gold lower. At the same time, the U.S. dollar has strengthened slightly, which largely explains what is happening.”
The stronger U.S. dollar has made dollar-denominated gold more expensive for holders of other currencies. Benchmark 10-year U.S. Treasury yields also moved higher.
According to CME Group’s FedWatch Tool, traders now see roughly a 67% probability of an interest rate increase in September, reflecting growing expectations of tighter monetary policy.
Investors are awaiting June employment data from ADP, due later on Wednesday, as well as Thursday’s nonfarm payrolls report for further clues about the Federal Reserve’s interest rate path, which could influence gold prices in the near term.
Oil prices rose after Iran announced that it would not meet with U.S. envoys who had traveled to the region, reducing hopes for near-term diplomatic progress.
Among other precious metals, spot silver fell 1.4% to $57.75 per ounce, platinum slipped 0.6% to $1,542 per ounce after touching its lowest level since last November, and palladium declined 0.4% to $1,199.34 per ounce.
Reuters
