Gold prices edged lower on Thursday, remaining under pressure from elevated U.S. Treasury yields and a firmer dollar, even as diplomatic developments around the U.S.-Iran conflict provided some support and limited the downside.
Spot gold fell 0.3% to $4,528.03 per ounce by 0611 GMT. The metal had rebounded more than 1% on Wednesday after sliding to its lowest level since March 30 at $4,479.54. U.S. gold futures for June delivery declined 0.1% to $4,528.90.
“Inflation expectation, rising yields, and stronger dollar are the headwinds keeping gold prices under pressure. And these factors will continue to remain in place until we get clarity on how long the conflict is going to persist,” said ANZ analyst Soni Kumari.
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Since the Iran war erupted in late February, gold has lost more than 14%, reflecting the market’s shift in focus from geopolitical risk to the monetary policy implications of sustained higher energy prices.
Yields Resume Upward March After Brief Pause
U.S. Treasury yields climbed again on Thursday after a short-lived pullback. The benchmark 10-year note yield rose more than 3 basis points to 4.6014%, while the 30-year bond yield advanced over 1 basis point to 5.1334%. The policy-sensitive 2-year yield increased more than 3 basis points to 4.0746%.
This renewed selling pressure followed the release of the Federal Reserve’s April meeting minutes, which showed that a majority of policymakers believe “some policy firming would likely become appropriate” if inflation remains persistently above the 2% target. Markets are now pricing in a roughly 39% probability of a 25 basis-point rate hike by December, according to CME Group’s FedWatch tool.
Higher yields raise the opportunity cost of holding non-yielding assets like gold. Kelvin Wong, senior market analyst at OANDA, highlighted the technical picture.
“The overall trend of 10-year U.S. Treasury yield, since the start of early March, is still in a medium-term uptrend phase. Hence, gold bulls may not be so aggressive in beating up prices at this juncture,” he said.
He sees near-term resistance at $4,645 and support at $4,456.
Oil and Geopolitics Provide Mixed Signals
Oil prices edged higher on Thursday amid continued uncertainty in the Middle East. U.S. West Texas Intermediate futures rose 1.4% to $99.61 per barrel, while Brent crude gained 1.3% to $106.42.On the diplomatic front, President Donald Trump said he had paused planned military action after receiving a peace proposal from Tehran, stating there was a “very good chance” of reaching a deal to limit Iran’s nuclear program.
While this eased some immediate safe-haven buying in gold, analysts caution that any resolution is unlikely to bring energy prices back to pre-war levels quickly.
The current environment presents a classic headwind for gold: geopolitical risk is supportive, but the resulting inflation fears are driving real yields higher and strengthening the dollar — both negative for the metal. This dynamic has dominated price action since the conflict began, overriding gold’s traditional safe-haven status in the short term.
Investors are also awaiting key U.S. housing data later on Thursday, including April housing starts and building permits. Consensus forecasts point to 1.41 million starts (down from 1.502 million in March) and 1.39 million permits (up from 1.363 million).
Outlook for Gold
Gold’s performance remains heavily tied to the interplay between Middle East developments and U.S. monetary policy expectations. A swift diplomatic breakthrough could ease energy prices and reduce inflation fears, potentially allowing yields to stabilize and opening the door for a gold recovery.
Conversely, prolonged conflict or hotter-than-expected inflation data would likely keep pressure on bullion.
For now, the metal appears range-bound with a mild downside bias. Longer-term investors continue to see gold as an important portfolio diversifier amid elevated geopolitical risks, fiscal deficits, and uncertainty around central bank policy paths. However, near-term traders are likely to remain cautious until clearer signals emerge from both the Fed and the Middle East.