Central Banks Prop Up Gold Prices Amid Rate Expectations
Gold prices have steadied at around $4,158.95 an ounce, after a volatile session that saw the metal drop as much as 4% to $4,111, its weakest level since August 5.
The decline was largely driven by stalled negotiations between Washington and Tehran, which fueled concerns over oil supply disruptions and inflation.
As a result, US Treasury yields rose, and traders priced in the prospect of further Federal Reserve tightening, eroding the appeal of non-yielding bullion.
Futures markets are assigning a 70% probability to a Fed rate hike in October, which has already cost gold 2.9% since the central bank's hawkish signals last week.
Despite this pressure, central banks remain a steady source of demand for gold, with net purchases jumping 62% year-over-year in the second quarter of 2026 to 288.9 tonnes.