Gold prices steadied on Tuesday after briefly dipping below the $4,000 mark, buoyed by a temporary pause in the U.S. dollar’s rally and slightly lower Treasury yields.
The precious metal’s recovery came as investors awaited key U.S. economic data that could determine whether the Federal Reserve cuts interest rates again this year. But across the broader market, another major hedge asset — bitcoin — tumbled sharply, as the dollar’s growing strength rippled through the hedges.
Spot gold was down 0.2% at $3,994.47 per ounce as of 1210 GMT, recovering from an earlier 0.9% loss, while U.S. gold futures for December delivery eased 0.2% to $4,004.70 per ounce.
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Carlo Alberto De Casa, external analyst at Swissquote Bank, said gold is consolidating around the crucial $4,000 threshold.
“The next few weeks will be crucial for understanding if there’s space for more rally or we see a correction,” he said. “We’re seeing a stronger U.S. dollar and expectations for a cut in December going down. Also, yields are going up and this is affecting gold.”
The dollar index, which measures the greenback against a basket of major currencies, eased slightly after touching a three-month high. Benchmark U.S. 10-year Treasury yields also retreated from Monday’s three-week peak, providing some relief for gold after a round of selling pressure.
The Federal Reserve cut interest rates for the second time this year last week, but Chair Jerome Powell warned that another rate cut in 2025 was “not a foregone conclusion,” a remark that dampened market optimism. According to CME’s FedWatch Tool, traders now see a 65% chance of another rate cut in December — sharply down from over 90% before Powell’s comments.
Gold, which typically thrives in low-interest-rate environments, has faced resistance amid the dollar’s resurgence.
“The initial break below $4,000 triggered a wave of technical selling and unwinding of long positions,” said Fawad Razaqzada, market analyst at City Index and FOREX.com. “But as long as the metal holds above its current support levels, the long-term bullish outlook remains intact.”
Meanwhile, bitcoin — another asset often viewed as a hedge against inflation and currency weakness — fell to around $100,000 on Tuesday, extending a week-long slide that has seen more than $300 billion wiped off its total market capitalization. Analysts say bitcoin’s decline is tied to the same forces weighing on gold: a resurgent U.S. dollar and rising yields.
Analysts say the stronger the dollar gets, the harder it becomes for bitcoin and gold to rally. With the greenback gaining momentum again, risk assets are now facing pressure.
The dollar’s strength could grow further in the coming days, depending on the outcome of a pending Supreme Court ruling on Trump’s tariffs. Economists say if the Court rules the tariffs illegal, it could lead to lower import costs, reduced inflationary pressure, and a stronger U.S. dollar — a development that would likely place even more downward pressure on gold and bitcoin.
Investors are also awaiting key U.S. economic indicators this week, including the ADP private payrolls report and ISM manufacturing and services data, for clearer clues on the Fed’s next moves.
In other precious metals, silver slipped 0.6% to $47.80 per ounce, platinum declined 0.5% to $1,558.25, and palladium fell 2.8% to $1,405.
Analysts say the broader picture remains one of heightened uncertainty. While gold remains near record levels, its short-term momentum appears fragile. With bitcoin sliding and the dollar poised for more strength, markets are entering a phase where traditional and digital hedges alike are being tested against the world’s most dominant currency.