Gold prices extended their losing streak to a tenth consecutive session on Tuesday, pressured by rising bond yields, a firmer United States dollar and growing expectations that central banks may need to tighten policy further amid persistent inflation risks.
The precious metal declined during the Asian session, struggling to sustain a modest overnight rebound from a four-month low of US$4,099.13 level.
By 3:25 pm AEDT (4:25 am GMT), spot gold was down 1.7% at US$4,332.03 per ounce.
Ongoing conflict in the Middle East continues to fuel inflation concerns, with the war between the United States and Iran contributing to elevated energy prices and dampening expectations for near-term interest rate cuts.
This has weighed on gold, which typically underperforms in a higher interest rate environment due to its non-yielding nature.
Iran’s denial of any negotiations with the United States also contributed to market uncertainty. Tehran contradicted comments by President Donald Trump, who had suggested that a deal to end the conflict could be reached soon.
Geopolitical tensions have also intensified following renewed attacks on Iran’s energy infrastructure. Combined with the effective closure of the Strait of Hormuz, this has supported a rebound in crude oil prices, reinforcing concerns about renewed inflationary pressures globally.
As a result, markets are increasingly pricing in the possibility that central banks, including the Federal Reserve, may need to consider further rate hikes rather than cuts.
Traders have largely ruled out additional easing this year and are building expectations for a potential rate increase by year-end.
This shift in outlook has driven a fresh rise in U.S. Treasury yields, supporting the U.S. dollar and prompting investors to rotate away from non-yielding assets such as gold.
Despite the bearish trend, lingering geopolitical risks continue to provide some underlying support for the safe-haven metal, potentially limiting further downside as uncertainty around the conflict persists.
Looking ahead, market participants are expected to focus on upcoming global flash puchasing managers' index (PMI) data for fresh signals on economic momentum.
