Gold Slips on Strong Dollar and Higher Treasury Yields

Gold prices edged lower on Tuesday, facing pressure from a stronger U.S. dollar and higher Treasury yields. The decline was somewhat restrained by easing expectations of a Federal Reserve interest rate hike in October. Spot gold dipped 0.3% to $4,128.69 per ounce, while U.S. gold futures saw little change, holding steady at $4,156.00.

The dollar's strength made gold more expensive for investors holding other currencies. Meanwhile, the 10- and 30-year Treasury yields reached 24-year highs on Monday, reflecting ongoing bond market weakness. Analysts noted that while short-term factors were weighing on gold, the long-term outlook remained positive, particularly due to geopolitical risks in the Middle East.

Kyle Rodda, a senior financial market analyst at Capital.com, highlighted that future gold movements could be driven by geopolitical tensions or shifts in U.S. rate expectations. Recent data showed slower U.S. job growth in September, reducing the likelihood of an October rate hike. However, traders still see an 87% chance of a rate increase in December, which would raise the opportunity cost of holding gold.

Other precious metals also saw declines, with spot silver dropping 0.6% to $60.67, platinum falling 0.7% to $1,710.08, and palladium easing 0.2% to $1,170.15. Meanwhile, tensions in the Middle East escalated as Saudi-backed Yemeni forces advanced, pushing back Iran-backed Houthi fighters from key coastal areas.