Gold Prices Plunge Amid Strong Dollar and Higher Treasury Yields

Gold prices fell on Friday, reversing earlier gains, as a stronger US dollar and higher US Treasury yields weighed on the non-yielding metal. The precious metal is now on track for a weekly decline of about 3.4%. Spot gold lost 0.9% to $4,140.06 per ounce by 02:33 p.m. EDT.

The stronger dollar and higher yields are key factors behind the decline in gold prices. The US dollar edged lower on Friday but is headed for a weekly gain. Meanwhile, yields on 10- and 30-year Treasuries hit their highest levels since 2002 on Thursday.

Gold bugs may be cautious about buying into the market at this time, according to Han Tan, chief market analyst at Bybit. He notes that the Fed retains a hawkish bias and is focused on subduing US inflation. Bullion has fallen over 20% since the US-Israeli war with Iran began in late February.

Traders now see a 22% chance of a US rate hike this month, down from around 70% earlier in the week. This reduced expectation for a rate hike is weighing on gold prices. Edward Meir, a Marex analyst, believes that the charts still look fairly grim and gold could push lower if the rate cycle resumes its ascent.