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Gold came under renewed pressure on Thursday, erasing part of its recent rebound as rising US Treasury yields and a firmer dollar weighed on the metal. The shift in sentiment followed signals from US President Donald Trump pointing to a risk of escalation in tensions in the Middle East, which dampened expectations of a near-term resolution. The resulting surge in oil prices reinforced inflation concerns, supporting both the dollar and yields and reducing the appeal of non-yielding assets such as gold.
Investor positioning also reflects a more cautious stance. Continued outflows from gold-backed ETFs, now extending to four consecutive weeks, highlight weakening conviction. While ongoing central bank purchases have provided an underlying layer of support, recent developments such as Turkey’s gold sales could raise questions about the consistency of official sector demand.
However, persistent tensions in Eastern Europe could help limit downside pressure. Overall, gold is likely to remain highly reactive to shifts in geopolitical developments in the Middle East and their transmission into oil prices, inflation expectations, and the path of monetary policy.
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