Bullion traded around $4,330 per ounce after a sharp three day slide that took it to a two week trough. As of 7:26 a.m. in Singapore, spot gold sat at $4,329.16 an ounce with little movement, silver was steady at $64.11, and both platinum and palladium slipped.
A firmer US dollar and rising yields have been a headwind for non yielding gold. The Bloomberg Dollar Spot Index was flat after a 0.2% gain in the prior session.
Bonds sold off worldwide, pushing long term borrowing costs to levels last seen in 2008. In the US, yields on the longest maturities returned to where they stood just before Treasury Secretary Scott Bessent surprised markets by expanding a buyback program. By Tuesday, the 30 year yield moved above 5.28%, matching levels from before Bessent's Aug. 19 announcement.
The quick reversal suggests an out of cycle tweak to buybacks was not enough to quiet worries about swelling debt and persistent inflation. Traders also boosted the odds of a rate increase at the Fed's Sept. 15-16 meeting to almost 70%, adding pressure to gold.
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On Friday, Fed Chair Kevin Warsh reinforced his pledge to tackle inflation. On Tuesday, Fed Governor Michael Barr said the central bank must be ready to lift rates if inflation does not ease, warning that price pressures risk becoming entrenched after more than five years above target. His remarks followed signs of rifts at July's policy meeting, which saw three presidents from regional Fed banks dissent in favor of a hike.
Meanwhile, on Tuesday the US carried out a new wave hitting targets in Iran, and the Islamic Republic said it struck back, signaling a sharp escalation after weeks of relative calm. A prolonged return to conflict could push energy costs higher.
Higher yields, a sturdier dollar, and rising odds of another Fed hike are a tough mix for gold. Add in renewed US Iran tensions that threaten to keep oil prices elevated, and you get a market leaning against precious metals. If you hold gold as an inflation hedge or geopolitical ballast, the next moves likely hinge on whether inflation cools, the Fed follows through in mid September, and whether the latest Mideast flare up proves fleeting or not.