Gold price falls as US yields surge, pressuring bullion

Gold prices fell on Tuesday as US Treasury yields surged, putting pressure on bullion. The US Dollar Index remained flat at 99.60. The 10-year Treasury yield dropped by over 1 basis point to 4.712%. US President Donald Trump expressed doubt about Iran accepting Washington's terms to end hostilities, while Iran held an aggressive stance.

Iran threatened to keep the Strait of Hormuz closed if the US didn't accept their demands. Oil prices remained volatile due to the uncertainty in the Middle East, which bolstered the case for a Federal Reserve interest rate hike. Lower-than-expected jobs and inflation data pushed investors to anticipate rate hikes beyond 2026. US Housing Starts in July dropped by 12.4% month-over-month, and Industrial Production dipped below expectations.

Gold prices slipped below $4,400 and the 100-day Simple Moving Average of $4,384. The Relative Strength Index indicated increasing selling pressure. A drop below $4,350 could lead to a test of $4,300, followed by a decline to $4,202, the July 6 high, and then the 50-day SMA and $4,100. A bullish rebound would require breaking the $4,400 barrier, with subsequent resistance at $4,450 and $4,500.

Gold has historically been used as a store of value and hedge against inflation and currency depreciation. Central banks, especially from emerging economies like China, India, and Turkey, have been increasing their gold reserves. When the US dollar depreciates or US Treasury yields fall, gold tends to rise due to its inverse relationship with these assets.

Geopolitical instability and fears of recession can also trigger gold price increases, as it is often seen as a safe-haven asset.