Gold Prices Plummet to Two-Week Low Amid Rate Repricing and Oil Shock

Gold prices plummeted to a two-week low on Tuesday, weighed down by a global bond selloff, a stronger US dollar, and rising oil prices. The spot price of gold fell 1.72% to $4,370.80 an ounce, while silver dropped 2.73% to $64.60. This move comes as traders reassess the probability of a September Federal Reserve rate hike following Fed Chair Kevin Warsh's comments on inflation.

The bond selloff pushed up yields, with the 10-year Treasury note rising to its highest level since January 2025 at around 4.79%. The two-year yield also surged near 4.35%. This rate repricing has put pressure on gold and other non-yielding assets.

The geopolitical situation in the Middle East continues to support defensive demand for gold, particularly with tensions escalating in the Strait of Hormuz. However, higher oil prices also increase inflation risk, reinforcing the case for a Fed rate hike and keeping yields bearish for metals.