Gold prices slipped on Tuesday as renewed U.S. strikes on Iranian targets and Tehran’s retaliation lifted oil prices, pushed global bond yields higher and revived expectations of a Federal Reserve rate hike. At 21:31 ET (01:31 GMT) the spot XAU/USD price was down 0.3% at $4,317.54 per ounce, while the front‑month gold futures contract fell 0.7% to $4,364.36. Silver (XAG/USD) also slipped 0.3% to $63.92 an ounce and platinum (XPT/USD) dropped 0.7% to $1,731.81. The U.S. Dollar Index edged up 0.1% to 99.76.
Oil markets reacted sharply: Brent crude rose above $95 a barrel and U.S. West Texas Intermediate climbed above $91, as traders priced in the risk that a prolonged Iran‑U.S. confrontation could disrupt energy flows through the Strait of Hormuz. Higher energy costs feed directly into inflation, raising the probability that the Fed will need to tighten further. Market pricing now reflects roughly a 70% chance of a rate increase at the September 15‑16 policy meeting, up from earlier expectations.
The heightened rate‑hike probability follows a hawkish Jackson Hole speech by former Fed Chair Kevin Warsh last week and fresh warnings from Fed officials. Fed Governor Michael Barr said policymakers must be prepared to raise rates if inflation does not ease, cautioning that price pressures could become entrenched after staying above the Fed’s target for more than five years.
Bond markets mirrored the inflation shock. Thirty‑year U.S. Treasury yields climbed back above 5.28%, erasing much of the decline that followed Treasury Secretary Scott Bessent’s buyback expansion announcement on August 19. Global sovereign yields rose to their highest levels since 2008, and the stronger dollar added a further headwind for gold by making dollar‑priced bullion more expensive for non‑U.S. buyers.
Gold’s recent decline follows a near‑10% gain in August, its strongest monthly performance since January. That rally had been supported by the Treasury’s liquidity intervention, which initially encouraged investors to increase gold exposure. ANZ noted that the latest reversal in yields and the dollar has curtailed that momentum, although it expects the broader debasement theme to continue attracting buyers.
Technically, gold broke below its 200‑day moving average, a widely watched long‑term momentum indicator, adding further downside pressure.
Overall, the combination of rising oil prices, higher bond yields, a firmer dollar and heightened expectations of Fed tightening created a multi‑factor environment that pushed gold to a two‑week low.