Gold fell on Wednesday, a day after touching its lowest level since November, as rising US Treasury yields and growing expectations of a Federal Reserve rate rise weighed on the metal.
Spot gold was down 0.7% at $3,979.41 per ounce by 03:00 GMT. In the previous session it had dropped as far as $3,942.99, a seven-month low. August gold futures fell 1.1% to $3,992.70.
Tuesday’s session also marked gold’s steepest quarterly decline since 2013. The metal has now fallen for four months in a row through June, as Middle East tensions stoked inflation concerns and reinforced the case for tighter US monetary policy.
Ilya Spivak, head of global macro at Tastylive, pointed to bond markets as the main driver. “The pressure from rising bond yields is what appears to be pushing gold lower,” he said. “The US dollar also ticked up at the same time, which somewhat confirms what’s going on.”
A stronger dollar makes dollar-denominated gold more expensive for holders of other currencies, compounding the selling pressure. Benchmark 10-year Treasury yields also moved higher.
The CME Group’s FedWatch tool showed traders pricing in roughly a 67% probability of a rate rise in September, reflecting broadening expectations of further monetary tightening.
Iran’s refusal to meet directly with US envoys visiting the region also weighed on sentiment, dimming near-term prospects for a diplomatic resolution to the conflict and keeping inflation fears elevated.
Investors are now watching ADP employment data for June, due later Wednesday, and non-farm payrolls on Thursday for fresh signals on the Fed’s likely path, both of which could set the near-term direction for gold.
Other precious metals also fell. Spot silver dropped 1.4% to $57.75 per ounce, platinum slipped 0.6% to $1,542 after hitting its own November low, and palladium eased 0.4% to $1,199.34.
