Gold’s attempt to hold the $4,300 level is faltering as a stronger dollar and surging Treasury yields raise the opportunity cost of holding non-yielding assets. Spot gold was up 0.2% at $4,288.36 an ounce early Friday but remained on track for a weekly decline of about 2%, while US gold futures gained 0.6% to $4,323.10.
The macro backdrop tightened further: the 10-year Treasury yield traded around 5.19% after hitting 5.2251%, its highest in 19 years, and the 30-year yield climbed close to 5.5%, the highest in more than two decades. The dollar index was heading for a weekly advance near 101.25.
Philadelphia Fed President Anna Paulson said underlying inflation remained around 2.5% to 3% with little progress toward the Fed’s 2% target, and backed last week’s quarter-point increase. MUFG strategist Soojin Kim said gold is being pulled in opposite directions by geopolitical uncertainty and restrictive US monetary policy, which reduces the appeal of bullion relative to yield-bearing assets. Futures markets now assign a 71% probability to another rate increase next month, up from about 53% earlier in the week.
Oil added to the inflation concerns, with Brent holding above $105 a barrel as the US and Iran remained deadlocked over reopening the Strait of Hormuz. A phased plan reportedly includes Iran reopening the waterway in exchange for the US lifting a blockade on an Iranian port, but until a deal is reached, higher energy costs are likely to keep pressure on inflation and Fed policy.
For digital assets, the message is similar to gold: higher real yields and a stronger dollar make liquidity tighter and reduce the appeal of assets that do not generate yield. Bitcoin and broader crypto markets may face headwinds if the Fed remains hawkish.
Still, structural demand has not disappeared. World Gold Council data show global gold-backed ETFs attracted $18 billion in August, the second-largest monthly inflow on record, with holdings rising 121 tonnes to a record 4,189 tonnes. Central banks added 23 tonnes in July, with China and Poland among the largest reported buyers. That suggests long-term haven demand remains intact, but the near-term direction for gold and crypto may hinge on yields, oil, and the Fed’s next steps.
