Gold prices continued to decline on Wednesday under pressure from rising US Treasury yields. Spot gold traded at $3,964.8 per ounce, down 1.1 percent, after hitting a seven-month low in the previous session.
Gold fell to $3,942.99 on Tuesday, its lowest since November. US gold futures for August delivery dropped 1.5 percent to $3,978.2.
Inflation and rate expectations weigh on prices
Gold recorded its sharpest quarterly drop since 2013 and posted its fourth consecutive monthly decline in June. Rising tensions in the Middle East fueled inflation concerns and strengthened expectations of a US interest rate hike, increasing pressure on the precious metal.
"Rising bond yields are pulling gold down. The US dollar also edged up at the same time, confirming the move," said Ilya Spivak, Head of Global Macro at TISTI LAIF.
Markets focus on September
The rise in the dollar index made gold more expensive for holders of other currencies, while 10-year US Treasury yields continued their upward trend. According to the CME Group's FedWatch tool, investors are pricing in a nearly 67 percent chance of a rate hike in September.
Investors are now awaiting the ADP employment data for June, due later on Wednesday, and the non-farm payrolls report due on Thursday, for more clues on the Federal Reserve's rate path.
Iran-US tensions boost oil prices
Iran's statement that it would not meet with US envoys who arrived in the region following the resurgence of hostilities weakened the prospect of diplomatic progress and led to a rise in oil prices.
Other precious metals update
- Silver: Down 1.4 percent in the spot market to $57.75 per ounce
- Platinum: Fell 0.6 percent to $1,542, its lowest since November
- Palladium: Traded at $1,199.34, down 0.4 percent
