Gold Falls to Weekly Low as Yields and Dollar Rise

Gold fell sharply to its lowest level in more than a week as rising US inflation concerns pushed Treasury yields and the dollar higher, overpowering safe haven demand from the Middle East conflict.

Key insights:

• Spot gold dropped by around 3 percent at one point to nearly USD 4,510.99 per ounce, while June gold futures fell around 2.9 percent to about USD 4,550.80 per ounce.
• Gold was heading for a weekly loss of around 3.6 percent, reflecting a sharp reversal after recent geopolitical driven gains.
• US 10 year Treasury yields climbed close to a one year high, around 4.54 percent, increasing the opportunity cost of holding gold, which does not pay interest.
• The dollar also strengthened, with market coverage showing the Dollar Index around 99.17 and up more than 1 percent for the week.
• Higher energy prices added to inflation pressure, with Brent crude rising around 7.8 percent this week and trading above USD 107 to 109 per barrel during the latest market moves.
• The selloff was not limited to gold. Silver, platinum and palladium also weakened, showing broader pressure across precious metals.
• Fed rate cut expectations have been pushed back as investors price a longer period of elevated interest rates.

The main takeaway is that gold remains supported by geopolitical uncertainty, but inflation, yields and dollar strength are currently dominating the short term trade. If energy prices keep inflation expectations elevated, gold may stay volatile even while safe haven demand remains structurally strong.