Gold prices declined on Tuesday as investors assessed higher US Treasury yields, a firmer dollar and expectations for the Federal Reserve’s upcoming interest-rate decision.
Spot gold was down 0.2% at $4,290.39 an ounce at 02:16 ET, following a decline of more than 1% in the previous session. Gold futures fell 0.5% to $4,330.57.
Elsewhere in precious metals, spot silver declined 0.2% to $63.12 an ounce, while platinum rose 0.2% to $1,769.49. The US Dollar Index increased 0.2% to 99.63.
Fed Rate Expectations Remain in Focus
Financial markets were assigning an approximately 92% probability to a Federal Reserve interest-rate increase this week.
The shift in rate expectations has coincided with higher Treasury yields. The benchmark 10-year US Treasury yield briefly reached 5% on Monday, its highest level in almost three years.
Higher interest rates increase the yields available on interest-bearing assets, which can affect demand for non-yielding investments such as gold.
Spot gold reached a five-week low on Monday and has fallen more than 3% since the beginning of September. The metal had traded above $4,600 an ounce in late August.
Energy Prices Add to Inflation Considerations
Investors were also assessing the implications of higher oil prices following the shutdown of Saudi Arabia’s East-West pipeline after attacks last week.
The pipeline had been used to transport Saudi crude while shipping through the Strait of Hormuz remained restricted.
Saudi authorities have not provided a timeframe for restarting the pipeline or indicated how quickly alternative shipments could compensate for the affected volumes.
The increase in energy prices has added to market attention on the inflation outlook ahead of the Federal Reserve’s policy decision.
OCBC Forecasts Gold at $4,600 by December
OCBC raised its forecasts for precious metals, citing higher prevailing prices, increased investor participation and structural demand.
Chez Anbu, OCBC’s head of wealth advisory, said the rise in gold prices during August reversed the softer performance recorded earlier as macroeconomic conditions changed.
The bank now forecasts gold at $4,600 an ounce by December 2026. Its forecast for silver stands at $69.70 an ounce.
Gold was also trading above the approximately $4,000 level reached during an earlier market correction.
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