Gold slumps as costlier crude oil fans gains in treasury yields

Gold sank — joining a slide in other precious metals — as a US-Iran impasse over the Strait of Hormuz kept energy costs elevated and maintained pressure on the Federal Reserve to raise interest rates again.

Spot bullion tumbled below $4,165 an ounce, while silver, platinum and palladium also dropped. Driving the selloff, oil rose with no progress over the critical waterway after recent talks, with the war between Washington and Tehran entering its eight month. Elsewhere, a gauge of the US dollar advanced along with Treasury yields, blunting precious metals’ appeal.

Gold is on course for a drop of almost 6% this month after the Fed delivered its first rate rise since 2023 to combat sticky US inflation, and flagged the possibility of more. The tightening has contributed to a surge in Treasury yields. At present, investors see about a 68% probability of a hike in October.

“Gold remains highly sensitive to oil prices and shifting expectations around a potential resolution in the Middle East,” said Justin Lin, an analyst at Global X ETFs. “At the same time, sellers are largely taking their cues from real yields, which have continued to move higher,” he added.

Cleveland Fed President Beth Hammack said Friday that long-term yields are being driven higher by a stronger growth outlook, concerns about government debt, and expectations for more rate rises. At the weekend, Treasury Secretary Scott Bessent said policymakers should keep an “open mind” on rates.

Spot gold traded 2.8% lower at $4 164.15 an ounce at 2:59 p.m. in Singapore. Silver was down 4.4% at $61.46 an ounce. The Bloomberg Dollar Spot Index, a gauge of the US currency, was up 0.2%.

In the corporate arena, South Africa’s Gold Fields made a $27.1 billion approach to acquire major Australian miner Northern Star Resources Ltd. The target company rejected the cash-and-shares proposal, which it described as “highly opportunistic”.

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