Gold declined on Tuesday as renewed U.S.-Iran strikes pushed oil higher and deepened a global bond selloff, while traders raised bets on a Federal Reserve rate hike this month. The metal has now fallen around $320 from last week's high, though its broader August rally remains largely intact.
Iran strikes and yields push gold lower
Spot gold fell 1.6% to $4,379.84 an ounce at 07:31 ET, while Gold Futures declined 1.2% to $4,430.26.
Silver dropped 2.6% to $64.85 an ounce and platinum fell 1.9% to $1,762.70, as the US Dollar Index rose 0.2% to 99.55.
The decline builds on Friday's more than 3% drop, when Fed Chair Kevin Warsh signaled a firm commitment to returning inflation to the central bank's 2% target. Markets responded by lifting the odds of a 25 basis point rate hike at the September meeting to about 66%, up from roughly 40% before Warsh's Jackson Hole speech.
Renewed fighting between the United States and Iran has also stoked inflation concerns elsewhere. Brent crude climbed above $92 a barrel and U.S. crude rose above $87 on worries over energy-supply disruptions. The 10-year Treasury yield climbed to around 4.78%, its highest level since early 2025.
Tony Sycamore, senior market analyst at IG, said the combination of Warsh's hawkish Jackson Hole speech and fresh tensions around the Strait of Hormuz drove the roughly $300 decline from last week's peak. He estimates markets are now pricing around 60 basis points of rate increases through June 2027.
August's debasement trade still supports the rally
The pullback has not erased gold's broader gains. The metal is coming off a month of nearly 10% gains after the U.S. Treasury unexpectedly increased purchases of longer-dated government debt, a move that pushed borrowing costs lower and weakened the dollar while reviving concerns about the scale of government debt and possible currency devaluation.
Those concerns brought the debasement trade back into focus, a theme that helped drive gold's roughly 65% rally in 2025 as investors sought protection from rising deficits and weaker currencies. Gold-backed ETFs recorded strong inflows, and central bank buying added further support.
Gold has, however, slipped below its 200-day moving average near $4,526 after breaking beneath the level following Warsh's speech. Sycamore said the break has not changed his medium-term view: he sees gold based at the late-June low near $3,942 and continues to favor buying pullbacks, with $5,000 as his longer-term upside target.
Investors will next watch job openings data, the ADP employment report, and Friday's nonfarm payrolls for signs of labor-market strength and clues on whether the Fed follows through on the rate path now being priced.
Source: Investing.com
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