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Gold falls as rising US Treasury yields strengthen the US Dollar

August 18, 2026

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Gold snaps a two-day winning streak as rising US Treasury yields and a firmer US Dollar weigh on the precious metal.
Fading expectations of a September Fed rate hike provide some support and keep Gold within its recent range.
Technically, XAU/USD retains a constructive bias above the key moving averages on the 4-hour chart.

Gold (XAU/USD) attracts sellers on Tuesday, snapping a two-day winning streak as a firmer US Dollar (USD) and rising long-term US Treasury yields weigh on the precious metal. At the time of writing, XAU/USD trades around $4,393, down 0.50% on the day.

The benchmark 10-year US Treasury yield has climbed toward 4.75%, while the 30-year yield has risen above 5.30%, its highest level since 2007. The rise in yields is part of a broader global bond sell-off driven by inflation and fiscal concerns, with long-term borrowing costs in the United Kingdom, Germany and Japan also climbing to multi-decade highs. Higher yields increase the opportunity cost of holding non-yielding assets such as Gold.

Strategists at Brown Brothers Harriman highlight that the latest leg higher in crude is feeding through to rates and broader risk sentiment, noting that “the renewed upswing in crude Oil price is pushing bond yields higher and worsening already fragile fiscal dynamics.” However, BBH cautions that “the risk of further dovish Fed repricing will keep USD rebounds shallow and short-lived,” suggesting that any Dollar strength is likely to remain constrained.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.65 after rebounding from 99.30 on Monday, its weakest level since June 5.

Energy-driven inflation concerns stay at the forefront as the standoff between the United States (US) and Iran over the Strait of Hormuz drags on. US President Donald Trump said Washington is not seeking an extension of the memorandum of understanding with Iran, which expired on Monday.

Higher Oil prices keep the possibility of a Federal Reserve (Fed) interest-rate hike alive. However, recent weak US employment and consumer spending data, along with soft inflation readings, have reduced expectations of an imminent increase. Markets currently see around a 65% probability that the Fed will leave interest rates unchanged next month, according to the CME FedWatch Tool.

For Gold, the near-term outlook points to consolidation. Fading expectations of a September Fed rate hike provide some support, but the firmer US Dollar and rising Treasury yields limit its upside.

With a relatively light US economic calendar this week, traders will focus on the release of the Federal Open Market Committee (FOMC) Meeting Minutes on Wednesday, as well as developments in the Middle East.

Technical analysis: Neutral momentum keeps XAU/USD below $4,450

On the 4-hour chart, XAU/USD retains a constructive bias while holding above the 50-period Simple Moving Average (SMA) at $4,365. The pair also stays comfortably above the 100- and 200-period SMAs.

However, price action remains range-bound between $4,300 and $4,450. The Relative Strength Index (RSI) at 52 sits close to neutral. The Moving Average Convergence Divergence (MACD) remains slightly below the zero line, suggesting that bullish momentum has softened. Meanwhile, the Average Directional Index (ADX) at 30 indicates moderate trend strength.

On the upside, a break above the upper boundary of the range at $4,450 could expose the $4,500 psychological mark. A sustained move above this level would open the door to a fresh bullish leg.

On the downside, the 50-period SMA at $4,365 offers immediate support, followed by the lower end of the range at $4,300. A decisive break below this area would expose the 100-period SMA at $4,225 and the 200-period SMA at $4,151.