Gold Holds Near Three-Month High as Softer Oil Prices and Lower Treasury Yields Support Demand
Gold prices edged lower on Wednesday but remained close to a three-month high, as easing oil prices and declining U.S. Treasury yields helped reduce inflation concerns. Meanwhile, investors continued to monitor efforts by Iran and Oman to reopen the Strait of Hormuz, a key global energy shipping route.
As of 12:10 WIB, spot gold (XAU/USD) slipped 0.4% to $4,642.38 per ounce, while Gold Futures gained 0.1% to $4,699.04. Silver (XAG/USD) rose 0.7% to $69.05 per ounce, and platinum (XPT/USD) advanced 0.3% to $1,866.89. The U.S. Dollar Index also increased 0.1% to 99.01.
Lower Treasury Yields and Oil Prices Boost Gold Outlook
Gold has surged more than 7% over the past week, holding near the three-month peak reached in the previous session. The precious metal continues to find support from falling Treasury yields and softer oil prices, which have helped ease concerns that inflation could remain elevated and delay potential Federal Reserve rate cuts.
U.S. Treasury yields declined by approximately 5 to 7 basis points across the curve on Tuesday, while crude oil prices weakened amid growing optimism that tensions in the Middle East could ease. Iran and Oman reportedly held discussions regarding the creation of a temporary joint maritime corridor that could allow partial shipping activity through the Strait of Hormuz to resume.
Lower oil prices are particularly important for gold because energy costs are a major driver of inflation. A sharp rise in oil prices could force the Federal Reserve to maintain higher interest rates for longer, creating headwinds for gold, which does not generate yield and often becomes less attractive compared to interest-bearing assets.
The recent rally has also renewed focus on the Treasury-driven debasement trade. Analysts at ANZ noted that Treasury Secretary Scott Bessent did not provide additional details regarding debt-management changes announced last week, although reports suggest the Treasury may use part of its cash balance to fund buybacks of older, higher-yielding securities.
PCE Inflation Data and Warsh Speech in Focus
Investors are now turning their attention to two major catalysts that could shape the next move in gold prices: the release of the U.S. Personal Consumption Expenditures (PCE) inflation report on Wednesday and Federal Reserve Chair Kevin Warsh’s first speech at the Jackson Hole Symposium on Friday.
The PCE report is expected to provide fresh insight into the state of the U.S. economy and inflation trends. Boston Federal Reserve President Susan Collins recently expressed support for keeping interest rates unchanged for now, provided inflation continues to move toward the central bank’s 2% target.
Meanwhile, Warsh’s appearance at Jackson Hole could offer greater clarity on how the Federal Reserve intends to balance persistent inflation pressures with broader economic growth concerns.
Market participants are closely watching the speech for signals about when the Fed may be willing to adjust monetary policy in response to evolving inflation dynamics. Warsh has faced criticism for providing limited guidance regarding his economic outlook, making Friday’s remarks a potentially significant event for financial markets.
Gold Debasement Trade Returns to the Spotlight
Gold’s latest rally has also revived interest in the so-called debasement trade, a key driver of bullion prices throughout 2025. Investors increasingly view gold as a hedge against sovereign debt risks and currency depreciation, particularly as concerns grow over government deficits, fiscal spending, and the long-term purchasing power of fiat currencies.
With inflation data, Federal Reserve policy signals, Treasury market developments, and geopolitical tensions all influencing sentiment, gold remains firmly positioned as one of the market’s preferred safe-haven assets.