Gold falls below $4,400 as oil, Treasury yields pressure bullion

Gold prices dipped below $4,400 on Tuesday as rising U.S. Treasury yields and surging oil prices put pressure on the precious metal, while investors awaited Federal Reserve insights into future rate hikes. At 2:26 a.m. ET, XAU/USD slipped 0.5% to $4,395.78 per ounce, and Gold Futures dropped 0.5% to $4,451.07. XAG/USD fell 0.8% to $65.24, and XPT/USD declined 0.7% to $1,760.90.

The U.S. Dollar Index rose 0.1% to 99.67. Gold shed some of its recent gains as the 10-year U.S. Treasury yield continued its upward trajectory, increasing the opportunity cost of holding the non-yielding asset. Oil prices also climbed after Iran signaled readiness to adopt a "fully offensive" military stance if diplomatic talks with the United States fail, while Washington dismissed extending a temporary ceasefire.

This growing Middle East uncertainty has kept energy markets volatile and heightened concerns that higher oil prices could reignite inflation concerns. Interest-rate swaps now suggest a more than 65% probability that the Federal Reserve will maintain rates steady in September, following a recent decline in expectations after unexpected job losses, lower-than-anticipated consumer inflation, and weaker retail sales.

Although gold often serves as an inflation hedge, higher borrowing costs typically diminish its allure because bullion does not generate income. The recovery of gold above the $4,000-an-ounce level in recent weeks was driven by renewed demand and increased central-bank purchases, particularly from China. However, gold has slipped back near its 200-day moving average of $4,503, and a sustained break above both key resistance zones would bolster the case for a broader recovery toward $5,000.