GOLD prices extended their decline on Tuesday as a surging US dollar and rising Treasury yields outweighed the metal's safe-haven appeal, with investors reassessing expectations for US monetary policy amid mounting concerns over inflated artificial intelligence valuations.
Spot gold (XAU/USD) fell more than 1.3 per cent to trade at around US$4,139 after briefly touching an intraday high of US$4,198, reversing gains recorded in the previous session.
The sell-off came as a broader retreat in technology shares dampened investor sentiment, prompting renewed demand for the US dollar.
The US Dollar Index (DXY), which measures the greenback against a basket of six major currencies, climbed 0.4 per cent to 101.39, marking its highest level of the year.
Gold also remained under pressure from expectations that the Federal Reserve will maintain a restrictive monetary policy for longer than previously anticipated.
Markets now price in around 34 basis points of additional policy tightening by the end of 2026, a sharp turnaround from forecasts earlier this year that had pointed to roughly 60 basis points of interest rate cuts.
The shift in expectations has driven US Treasury yields higher, particularly the two-year note, which is highly sensitive to interest rate outlooks. The yield stood at 4.19 per cent, up 71 basis points from 3.475 per cent at the beginning of the year.
Further weighing on bullion was stronger-than-expected US manufacturing data.
The S&P Global Manufacturing Purchasing Managers' Index (PMI) rose to 55.7 in June from 55.1 in May, comfortably exceeding market expectations of 54.8.
The improvement reflected businesses accelerating orders to avoid supply shortages and rising costs linked to recent energy market disruptions caused by the US-Iran conflict.
Meanwhile, easing geopolitical tensions also reduced demand for defensive assets. Iran's ambassador to the United Nations said negotiations with the United States were making progress, while Washington temporarily lifted sanctions on Tehran for 60 days beginning Monday.
Although hostilities involving Lebanon persisted, the reopening of the Strait of Hormuz helped ease concerns over global energy supplies.
Oil prices continued to retreat for a second consecutive week as fears of supply disruptions subsided. West Texas Intermediate (WTI) crude fell 1.34 per cent to US$73.08 a barrel, bringing its weekly decline to more than three per cent and further reducing inflationary pressures that had previously supported gold prices.
Investors are now awaiting several key US economic releases later this week, including the Federal Reserve's preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index, revised Gross Domestic Product (GDP) figures and weekly jobless claims.
The data are expected to provide fresh direction for interest rate expectations and precious metals markets.
From a technical perspective, gold remains firmly in a bearish trend after breaking below its 200-day Simple Moving Average at US$4,446, a level widely regarded as critical for any sustained recovery.
The metal has now recorded four consecutive sessions of lower highs and lower lows, with analysts watching for a decisive break beneath US$4,100.
Such a move could pave the way for a test of the June 11 low at US$4,023, with the psychologically significant US$4,000 level emerging as the next major support. - June 24, 2026
