Gold Slides Below $4,300 as Dollar Strengthens and Yields Rise

The price of gold has been sliding despite the recent US-Iran strikes. In fact, spot gold traded around $4,300 in Asian hours on Wednesday after touching its lowest level since early August.

Rising oil prices, higher Treasury yields, and a stronger dollar are outweighing the metal's usual safe-haven appeal. The latest Middle East escalation is producing an unusual reaction in precious metals, lifting crude prices and inflation expectations, which in turn are pushing bond yields higher.

The combination of Middle East tensions, a stronger dollar, and rising yields is weighing down gold, according to ANZ Research. Higher energy costs strengthen the case for tighter monetary policy, offsetting some of the haven demand that would normally benefit bullion.

The US labour market will be the next catalyst for gold prices. The ADP employment report is due on Wednesday, followed by the more important August nonfarm-payrolls report on Friday. Economists expect payroll growth to remain subdued after July's surprise contraction, making labour data the clearest potential counterweight to the Fed's renewed inflation focus.