Gold Holds Below $4,400 as Bond Yields and Oil Prices Weigh
Gold prices edged lower on Tuesday as rising US Treasury yields and higher oil prices weighed on the precious metal, while traders awaited the Federal Reserve's July policy meeting minutes for fresh clues about the outlook for interest rates.
At 16:54 WIB, spot gold fell 0.5% to $4,393.91 per troy ounce, while gold futures also declined 0.5% to $4,449.92 per troy ounce.
Gold retreated from its recent rally as the 10-year US Treasury yield moved higher, increasing the opportunity cost of holding the non-yielding precious metal. Higher bond yields can reduce demand for gold as investors seek relatively more attractive returns from interest-bearing assets.
The US dollar also remained broadly stable after weakening slightly over the past week. A stronger dollar can weigh on gold prices by making the precious metal more expensive for buyers using other currencies.
Higher Oil Prices Add to Inflation Concerns
Meanwhile, oil prices advanced amid renewed geopolitical uncertainty in the Middle East. Reports indicated that Iran could adopt a more aggressive military posture if diplomatic efforts with the United States fail, while Washington declined to extend a temporary ceasefire agreement that expired on Monday.
Persistent uncertainty surrounding the conflict has kept energy markets volatile and raised concerns that higher oil prices could fuel another wave of inflation. A renewed increase in inflation expectations could complicate the Federal Reserve's plans for interest-rate cuts.
Fed Rate Expectations Remain in Focus
Despite the pressure from higher yields and oil prices, markets have significantly adjusted their expectations for a September rate move following recent US economic data.
Unexpected job losses, softer-than-expected consumer inflation, and weaker July retail sales have influenced expectations for the Federal Reserve's next policy decision. According to CME FedWatch, markets currently price in roughly a 63% probability that the Fed will leave interest rates unchanged in September, up from around 52% a week earlier.
Interest-rate swaps also no longer fully price in a Fed rate hike before the end of 2026.
Investors are now focused on the release of the Federal Reserve's latest meeting minutes on Wednesday. The minutes could provide additional insight into policymakers' views on inflation, economic conditions, and the appropriate path for interest rates.
Central Bank Demand Supports Gold Outlook
Beyond monetary policy, gold's recovery above the key $4,000 per troy ounce level in recent weeks has been supported by stronger central bank purchases, particularly from China.
Analysts at ANZ also see long-term support from continued central bank diversification. Global central banks purchased 244 tons of gold in the first quarter of 2026, marking the highest quarterly total since the fourth quarter of 2024.
China added another 8 tons of gold in April, its largest monthly purchase since December 2024. Continued geopolitical tensions and efforts by central banks to diversify their reserves could keep gold demand elevated.
ANZ expects deteriorating international relations to sustain demand for reserve diversification and forecasts gold prices to reach $5,200 per troy ounce by the end of 2026.
Gold Price Outlook
Gold remains under pressure below $4,400 as higher Treasury yields and rising oil prices create near-term headwinds. However, expectations for Federal Reserve policy, strong central bank demand, geopolitical risks, and reserve diversification could continue to provide longer-term support for the precious metal.
The upcoming Fed minutes will therefore be closely watched for signals that could determine the next major move in XAU/USD.