Gold Price Pulls Back as Treasury Yields Soar on Geopolitical Tensions

The gold market is experiencing a pullback as Treasury yields test new highs. The yield of 30-year Treasuries has climbed above 5.25%, a level last seen in 2007, due to geopolitical tensions and investments in AI. This rise in yields puts pressure on investment demand for gold.

However, central banks have continued to buy gold, using the recent pullback as an opportunity to boost their reserves. The FedWatch Tool indicates that there is a 64.8% probability that the Fed will raise rates at the next meeting in September, which serves as a negative catalyst for gold.

The U.S. dollar was relatively stable against a broad basket of currencies after the recent Fed decision and intervention in USD/JPY. Despite this, gold is struggling to settle above the support level at $4020-$4040, with a potential drop towards $3930-$3950 if it breaks below.