On Tuesday, gold prices fell by more than two percent and reached a low level for two weeks due to high Treasury yields and strengthened dollar. The price of gold dropped by 2.4% and reached $4.342.20 per ounce which was the lowest value since August 19. Gold’s falling below 200-day moving average (which now equals $4.528) increased the level of technical sell. Because of this, U.S. gold future price fell by 1.9% and was fixed at $4.396.40. The market analysts mentioned that breaking the key moving average shows that there is more sell pressure for this commodity.
Yields of the U.S. Treasury hit the highest result since January 2025 being mainly driven by the increasing tensions in the Middle East, which has raised inflation fears and led to sell-off in the global bonds market. Though gold is traditionally perceived as a good inflation hedge, the increase of interest rates and the increase of treasury yields gives a greater opportunity cost of holding this type of asset. At the same time, the rise of the dollar made the U.S.-priced gold become more too expensive for foreign customers thus increasing the pressure again.
The recently attained peak in gold prices reaching three month high was shortsighted as the prices plunged by 3% on Friday, due to the harsh remarks made by Federal Reserve. Fed chairman Kevin Warsh stated that there are still many things to be solved by the Fed in case inflation does not go below targeted 2%. His remarks sparked speculation among traders that Fed would implement its first rate hike in September. According to current Financial instruments in the market, the chance of any increase is likely to happen this month is 66%.
As a result of this development, market participants shifted their focus towards upcoming economic indicators, including ADP employment figures due out Wednesday and non-farm payrolls figures to be released Friday. As for the market expectations, analysts are convinced that gold and silver prices will stay stable or go lower. In addition to gold, other precious metals also suffered substantial drops, with silver down 2.9% at $64.57 per ounce, platinum down 1.9% at $1,756.58 and palladium down 3.2% at $1,312.13.
