Gold News: Gold Price Slips as Rising Yields and Strong Dollar Hit Bullion Demand

Gold Slips as Yields Rise and Safe-Haven Narrative Fades

Spot Gold is edging lower on Thursday as traders continue to respond to another jump in Treasury yields and a stronger U.S. Dollar. Technical factors may also be playing a role in today’s performance after Tuesday’s successful test of a key 50% level. The market is lower for the week as traders continue to assess the impact of the war in the Middle East on safe-haven demand.

At 15:31 GMT, XAUUSD is trading $5085.28, down $55.66 or -1.08%.

Monday’s Minor Top at $5419.66 Signaled the Shift

This week’s price action suggests safe-haven demand was taken off the table on Monday with a minor top at $5419.66, and the subsequent sharp break to $4996.27 on Tuesday. In my opinion, the new focus is on Treasury yields and the U.S. Dollar.

Gold Is an Investment, Not a Safe-Haven

The traditional safe-haven assets are U.S. Treasurys, U.S. Dollar, Japanese Yen, Swiss Franc and gold. I put gold last because I think gold is more of an investment than a safe-haven. Sometimes I think the newswriters blame a rally on safe-haven buying because it’s a catch-all term. I tend to think that the direction of gold is controlled by the direction of U.S. Treasury yields and the U.S. Dollar.

Trading 101 tells us to buy a safe-haven asset when there is unexpected risk, this is what traders did initially on Monday. However, the rally couldn’t last as traders began to focus on the possibility of a lengthy war between the U.S. and Iran and its potential inflationary pressure.

Longer War Means Higher Oil Means Higher Inflation Means No Rate Cut

A longer-than-expected war is being translated into higher-for-longer crude oil prices, which is expected to push up already elevated U.S. inflation. This would bring up the possibility of a Fed hold on rates at its June 17 meeting.

Besides central bank buying, the very structure of the more than year-long gold rally has been fueled by optimistic investors, betting on multiple rate cuts from the Fed. A March cut is already off the board and traders are saying there is only a 30.8% chance of a June cut and a 65.9% chance the Fed stands pat.

Yields Trapped Between Inflation Fears and Safe-Haven Buying

Meanwhile, with U.S. crude oil touching its highest level since June 2025, the thought of an extended war is gaining traction. Inflation fears are driving Treasury yields higher amid rising oil and labor costs. Given the current events in the Middle East, Treasury yields are trapped between oil-driven inflationary fears and traditional safe-haven buying. Additionally, higher yields are making the U.S. Dollar more attractive, further weighing on foreign demand for dollar-denominated gold.

So while gold is seen as a safe-haven to some, in reality, other professionals could feel over-exposed to it if yields continue to climb and as the odds of the Fed holding rates at current levels increases.

Retracement Zone at $5002.31 to $5143.89 Is the Battlefield

Technically, XAUUSD traders are stuck inside a retracement zone at $5002.31 to $5143.89. If it takes out the lower end of the range with conviction, it could plunge into the 50-day moving average at $4855.42. Additionally, overcoming $5143.89 will signal the presence of buyers, but a minor pivot at $5207.97 could be the trigger point for an acceleration to the upside.

More Information in our Economic Calendar.