Having dropped to an over 1 1/2-month low on Monday, Spot Gold steadied on likely dip buying.
Mounting inflation fears led to a rout in the global bond market. The yield on benchmark 10-year US Treasuries went up to highs last seen in February 2025, pressuring non-yielding Gold.
“The selloff in the longer end of the U.S. Treasuries implied that longer-term interest rates potentially are on the rise, which also indirectly creates a higher opportunity cost for holding gold,” Kelvin Wong, senior market analyst at OANDA, was quoted as saying by Reuters.
The energy shock in the Middle East has added to broader inflation concerns and reinforced the case for higher interest rates from major central banks.
Several Federal Reserve officials have recently stressed that keeping price pressures in check is their main objective and have indicated that additional rate hikes could be warranted if inflation persists.
Traders have largely priced out Fed interest rate cuts for 2026, while the probability of a hike by December stood at about 50%.
Geopolitical risk remains elevated as the United States and Iran remain distant from an agreement to end weeks of hostilities and to reopen the critical Strait of Hormuz waterway.
US President Donald Trump has intensified the standoff by issuing a public warning to Iran to make progress or face new consequences.
Meanwhile, J.P. Morgan has revised down its 2026 average Gold price forecast to $5,243/oz. from $5,708/oz., as it cited weaker near-term demand.
Spot Gold was last up 0.12% on the day to trade at $4,545.94 per troy ounce.
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