Gold prices have dropped by over 1% during the North American session due to a decrease in demand for safe-haven assets. This comes amid a stronger US Dollar and rising US Treasury yields, with gold currently trading at $3,297 after previously hitting $3,345.
Recent sentiments show improvement in the major US equity indices. While tariffs ranging from 25% to 40% have been imposed by the US on 14 countries, the deadline for these tariffs was extended to August 1.
Impact Of Us Treasury Yields On Gold
Increased US Treasury yields are affecting gold prices, as expectations for Federal Reserve rate cuts diminish. Data from the Chicago Board of Trade indicates an expectation of 48 basis points of easing in 2025.
Market participants await the latest Federal Reserve meeting minutes and the upcoming release of Initial Jobless Claims. US real yields and the 10-year Treasury note yield both saw increases of four basis points.
The NFIB Small Business Optimism Index slightly declined to 98.6 in June. Meanwhile, Gold ETFs experienced their largest inflow in five years, with holdings rising by 397.1 metric tons.
Gold remains under pressure, with the Relative Strength Index pointing towards more sellers than buyers. A crucial level is the June 30 low of $3,246, which, if broken, indicates further downside.
As gold slipped more than 1% during the North American hours, much of the decline stemmed from fading appetite for safe-haven assets, which typically see stronger demand during periods of uncertainty. This time, however, confidence in equities recovered, particularly across US indices, and the knock-on effect helped push treasuries higher. With bond yields rising, particularly the 10-year note gaining four basis points, the cost of holding gold—which yields no interest—naturally becomes less attractive.
Strength Of The Us Dollar And Its Effects On Gold
We’re also seeing the dollar grow stronger, which tends to weigh on gold. Since commodities like gold are priced in US dollars, a stronger currency generally translates into more expensive gold for overseas buyers. Not ideal, especially when we consider that long positions have been trimmed recently. The precious metal now trades around $3,297, dropping from recent resistance at $3,345.
For traders focused on rates, the adjustment in expectations is critical. With Federal Reserve cuts no longer expected this year and now being priced further out into 2025, US yields are being supported. The latest data from Chicago suggests that only 48 basis points of easing might occur across next year—well below what was once forecast. Such a backdrop drives strength in the dollar and weighs directly on bullion.
Wednesday will bring fresh cues with the release of the Fed’s meeting minutes followed by Thursday’s jobless claims. While neither may be explosive in isolation, together they paint a picture of where the central bank is heading. If jobless claims remain steady and labour market resilience persists, then anticipation of policy loosening loses further ground.
Technically, the RSI underlines the current bias. Momentum tilts toward the sellers, and already the June 30 low of $3,246 sits as a level markets are watching closely. A close below would hand more confidence to those fading gold’s recent rally. But with ETFs seeing their largest inflow in half a decade—397.1 metric tons added—there’s a growing counterweight that’s worth noting. Some desks might see this as a longer-term play or simply a hedge against other risks appearing less visible for now.
Elsewhere, the slight drop in the NFIB Small Business Optimism Index to 98.6 isn’t dramatic, but it fits the theme. Small businesses are good barometers of real economic feeling. Less optimism, even if marginal, feeds into broader caution.
From here, we should follow whether buying interest around $3,250 emerges, or whether yields and dollar strength continue pressing prices lower. Risk around policy re-pricing remains, and the tone of the Fed minutes may quickly shift market expectations. We’re lining up data, reassessing levels, and watching for volume to confirm any decisive move.
