Gold falls below $4,500 on rising global rate hike bets
- Gold price tumbles to around $4,480 in Wednesday’s early Asian session.
- Increase bets that global central banks may hike interest rates, which weighs on the Gold price.
- Trump threatened to resume strikes on Iran in the coming days.
Gold price (XAU/USD) faces some selling pressure near $4,480 during the early Asian session on Wednesday. The precious metal drops to its lowest since March 30 as persistent inflation fears keep interest rate hike expectations and Treasury yields high.
The US 30-year Treasury yields rose as much as seven basis points to 5.20% on Tuesday, a level last seen on the eve of the 2007 global financial crisis. Meanwhile, US 10-year Treasury yields climbed as much as 10 basis points to 4.69%, the highest since early 2025, before the move pared to around 4.66%.
"We are seeing a multi-country rise in real rates around the world, and that is really weighing mostly on gold. The dollar is also stronger, that's a negative," said Edward Meir, an analyst at Marex.
A lack of progress in reopening the Strait of Hormuz continued to raise fears of inflation and increase bets that global central banks may hike interest rates. Bloomberg reported on Tuesday that US President Donald Trump threatened to resume attacks on Iran in the coming days as part of the push for a deal to end the war, after he said he had just called off a US attack.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Author
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
