Sept 1 (Reuters) – Gold dropped more than 2% on Tuesday to a two-week low as elevated Treasury yields and a stronger U.S. dollar weighed on prices, while bullion's break below its 200-day moving average triggered additional technical selling.
Spot gold was down 2.4% at $4,342.20 per ounce at 2:02 p.m. ET (1802 GMT), after touching its lowest since August 19 at $4,362.89 earlier in the session. Bullion dropped below its 200-day moving average — currently around $4,528 — on August 28.
U.S. gold futures fell 1.9% to settle at $4,396.40.
"We're seeing some technical selling pressure… bond yields globally are at highs not seen in years. So that's all working to pressure the gold market," said Jim Wyckoff, a market analyst at American Gold Exchange.
"Gold price has dropped below its 200-day moving average, which is an important technical signal."
U.S. Treasury yields rose to their highest since January 2025 on Tuesday as rising tensions in the Middle East stoked inflation fears and triggered a global bond selloff. [US/]
Although gold is traditionally viewed as a hedge against inflation, rising interest rates and higher yields on Treasuries typically pressure gold as they raise the opportunity cost of holding the non-yielding asset. The dollar also gained, making greenback-priced gold more expensive to overseas buyers. [USD/]
Gold hit a more than three-month high last week before sliding over 3% on Friday, after U.S. Federal Reserve Chair Kevin Warsh warned of having more "work to do" if inflation does not cool down to the central bank's 2% target. Traders added to bets on a September rate hike after Warsh's comments.
Traders now see a 66% chance of a rate hike this month, CME's FedWatch Tool showed.
Investors are now looking ahead to the ADP employment report on Wednesday and non-farm payrolls data on Friday for fresh clues on economic policy.
"The path of least resistance right now is probably sideways or sideways to lower in the gold market over the near term. Same goes for silver," Wyckoff added.
Spot silver slid 2.9% to $64.57 an ounce, platinum fell 1.9% to $1,756.58 and palladium was down 3.2% at $1,312.13.
(Reporting by Dharna Bafna in Bengaluru; Editing by Leroy Leo, Jonathan Ananda and Joyjeet Das)
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