Gold fell below the psychologically important $4,300 level on Tuesday as sharply higher Federal Reserve rate-hike expectations, a strengthening dollar and surging Treasury yields overwhelmed safe-haven demand from rising Middle East tensions. Spot gold dropped 0.6% to $4,271.32 per ounce, while gold futures settled at $4,310.90, their weakest close since August 6.
The selloff accelerated after Saudi Arabia shut its 1,200-kilometer East-West pipeline following attacks by Iran-backed Houthi militants. The pipeline, which had carried between 2.6 million and 4 million barrels per day, is expected to remain offline for three to five weeks. Brent crude climbed 2% to $107.70 per barrel, and traders warned a prolonged shutdown could disrupt as much as 4% of global oil supply. The supply shock is reviving inflation concerns at a delicate moment for the Federal Reserve.
Markets now price a 92% chance of a quarter-point rate increase at the Fed’s September 15–16 meeting, up from 59% a week earlier, according to CME FedWatch. The US 10-year Treasury yield briefly crossed 5% for the first time since 2023, raising the opportunity cost of holding non-yielding assets. Trade Nation senior market analyst David Morrison said investors have increasingly favored the dollar over gold as an immediate haven. FXTM’s Lukman Otunuga said oil, central banks and yields could all push in the same direction, and the Fed’s guidance would likely drive the next major move across currencies, equities and gold.
For cryptocurrency markets, the macro backdrop is also restrictive. Elevated rate expectations, a stronger greenback and higher real yields typically reduce appetite for risk assets. Technical levels remain in focus for gold: a sustained move above roughly $4,323 could reopen the $4,400–$4,412 area, while failure to hold $4,275 may expose support near $4,234 and deepen the correction.
