Gold prices dropped sharply on Tuesday, weighed by rising US Treasury yields and a lack of progress in Middle East peace talks. Spot gold (XAU/USD) traded at $4,364, down more than 1.10%, as the yield on the 10-year Treasury note climbed earlier in the session to levels unseen since 2007.
Yields and geopolitics pressure gold
The 10-year yield ended the session slightly lower at 4.712% after hitting multi-year highs. Higher yields are a headwind for gold because the metal pays no interest, making it less attractive relative to bonds. The US Dollar Index (DXY) held flat at 99.60.
Meanwhile, energy prices remained elevated as talks between the US and Iran stalled. US President Donald Trump was cited as saying that Iran was unlikely to accept Washington’s terms to end hostilities. Iran has taken an offensive stance, warning that the Strait of Hormuz would remain closed if its demands were not met. The uncertainty underpinned oil prices, which in turn supported expectations that the Federal Reserve may have to raise interest rates further.
Mixed US data and fading momentum
Economic data released on Tuesday painted a mixed picture. Housing starts fell 12.4% month-on-month in July to 1.239 million, down from 1.415 million in June, driven by higher mortgage rates and elevated home prices. Separately, industrial production rose just 0.2% month-on-month, below the 0.3% expected.
Earlier this year, a weaker jobs report and cooling inflation had led investors to price out rate hikes for 2026. The combination of rising yields and geopolitical tensions has now reversed some of those expectations, putting renewed downward pressure on gold.
Technically, the metal slipped below the 100-day Simple Moving Average (SMA) of $4,384. The Relative Strength Index (RSI) is moving lower, suggesting sellers are gaining control. Should XAU/USD fall beneath $4,350, the next support levels are $4,300, followed by the July 6 high of $4,202, then the 50-day SMA at $4,146.
Key takeaways
- Gold fell 1.10% to $4,364, pressured by US 10-year yields hitting their highest since 2007.
- Stalled US-Iran talks boosted energy prices and fed expectations of further Fed tightening.
- Mixed US data showed housing starts diving 12.4% month-on-month, while industrial production missed forecasts.
- Technical indicators point to fading bullish momentum, with support at $4,350 then $4,300.
Common questions
Why does gold fall when bond yields rise?
Gold pays no interest or dividend. When bond yields climb, the opportunity cost of holding gold increases, making fixed-income assets more attractive. This tends to push gold prices lower.
What is the Strait of Hormuz and why does it matter for gold?
The Strait of Hormuz is a narrow waterway through which about 20% of the world’s oil passes. Threats to close it can send energy prices higher, which in turn raises inflation expectations and may influence central bank policy — both factors that affect gold prices.
What support and resistance levels matter for gold currently?
Immediate support sits at $4,350, with a break exposing $4,300 and then $4,202. Resistance starts at $4,400, followed by $4,450 and the $4,500 milestone.
Investors are now looking ahead to the release of the Federal Reserve’s policy meeting minutes on Wednesday for further clues on the path of interest rates. For the latest moves, check live gold price updates.