Gold slips as dollar, yields and oil firm

Gold prices moved lower on Tuesday, adding to the previous session’s decline as traders balanced geopolitical तनाव in the Middle East against a busy week of central bank decisions. The metal came under pressure from a firmer dollar and higher bond yields, even as investors stayed focused on policy signals from the Federal Reserve, the Bank of England and the Bank of Japan.

Central banks keep bullion in focus

Spot gold fell 0.7% to $4,268.60 an ounce after dropping more than 1% a day earlier. U.S. gold futures also weakened, slipping nearly 1% to $4,308.84. The latest move reflects how sensitive bullion remains to changes in interest-rate expectations and the dollar’s direction, both of which affect the appeal of non-yielding assets such as gold.

The Federal Reserve is due to announce its rate decision on Wednesday. Markets are widely expecting a 25-basis-point increase, with at least one more move anticipated by the end of March as policymakers try to contain persistent inflation. The Bank of England is expected to leave rates unchanged on Thursday, while the Bank of Japan is widely seen lifting its policy rate by another quarter-point on Friday to 1.25%, which would be the highest level in 31 years.

Oil and yields add to the pressure

Longer-dated U.S. borrowing costs stayed elevated, with the 10-year Treasury yield hovering near 5%, its highest level since October 2023. That backdrop has helped keep the dollar close to a two-week high. A stronger dollar tends to make gold more expensive for buyers using other currencies, while higher yields can draw demand away from bullion.

Oil markets also moved sharply higher. Brent crude rose more than 2% to trade above $108 a barrel after Saudi Arabia shut a key pipeline that bypasses the Strait of Hormuz following a drone attack. The shutdown raised concerns about tighter supply conditions at a time when the region is already on edge.

Fresh worries over global energy flows were compounded by a postponement of a much-anticipated meeting in Oman between Iran and Gulf states. The combination of firmer oil prices, elevated yields and a stronger dollar has left gold struggling to build on its recent gains, even with investors still watching Middle East developments closely.

This article is not investment advice and recommends no asset, level or direction; a single session's move is not evidence of a trend. For background see Currency, Cross Rate, Currency Pair, and for terms the finance glossary.