Gold Holds Firm Above $4,400 Despite Strong Dollar and Treasury Yields, Markets Focus on CPI Data and Strait of Hormuz Tensions

Published on 2026-08-11Last updated on 2026-08-11

Abstract

Gold prices extended their gains on Tuesday, holding near a more than two-month high. The continued momentum of buying was strong enough to offset pressures from a stronger U.S. dollar, rising Treasury yields, and increasing energy prices.

Gold prices extended gains on Tuesday, holding near their highest level in more than two months as building buying momentum proved sufficient to counter pressure from a stronger dollar, higher U.S. Treasury yields, and rising energy prices.

At 00:56 AM ET (12:56 Beijing Time), XAU/USD was up 0.4% at $4,407.79 per ounce, while gold futures rose 1.1% to $4,467.59. XAG/USD fell 0.5% to $65.41, and XPT/USD edged up 0.2% to $1,761.10.

Gold's Rally Builds Ahead of U.S. Inflation Data

The precious metal's advance extends Friday's strong gains, when it jumped 2.4% after data showed a surprise drop in U.S. nonfarm payrolls for July. Gold settled around $4,390 on Monday, up 1.11%, marking its highest closing level in nearly 10 weeks.

Notably, gold's rise is occurring against a backdrop of simultaneous strength in the dollar, Treasury yields, and energy prices. Previously, these factors would typically weigh on non-yielding bullion.

Tony Sycamore, a senior market analyst at IG Group, noted that gold's resilience reflects a confluence of forces: investors who missed opportunities to buy near $4,000 are chasing the rally, speculative short positions are being covered, and safe-haven demand is returning to the market.

Investors are now awaiting the release of the U.S. Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) on Thursday for fresh clues on the Federal Reserve's interest rate path.

According to the CME FedWatch tool, markets currently price in a 52% chance of a rate hike in September and an 81% probability for a hike in December.

As gold offers no interest, higher rates usually diminish its appeal.

Strait of Hormuz Uncertainty, Chinese Demand Provide Support

The outlook for the Strait of Hormuz has emerged as another key factor for gold. Iran said it is close to a final agreement with Oman on opening a new route through the strategic waterway, but Tehran reiterated that additional U.S. conditions must be met for the strait to reopen.

The diplomatic uncertainty has boosted oil prices again. A stalemate in U.S.-Iran talks, coupled with U.S. President Donald Trump's demand for compensation from Iran, further complicates reaching a deal. This keeps the focus on the risk that higher energy prices could fuel inflation and limit the Fed's room for monetary easing.

Meanwhile, China continues to provide significant underlying demand support for the gold market. The People's Bank of China increased its gold holdings in July by the largest amount since October 2023, adding further evidence to the trend of official sector accumulation.

The U.S. dollar index held largely steady near 99.8, offering limited directional cues for gold after strengthening alongside oil.

Sycamore said gold's rebound from its June low of $3,942 now looks poised to test the descending trend resistance near $4,460, formed by connecting the highs from late January and further reinforced by the 200-day moving average around $4,495.

He expects the $4,460-$4,500 area to cap prices initially, but a decisive break above could open the door for a stronger rebound toward $5,000.

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