Long-dated US Treasury yields surged sharply on Tuesday, lifting the opportunity cost of holding gold. Spot gold traded between $4,385.00 and $4,404.00 per ounce during the ASIan and European sessions, touching an intraday peak of $4,435.93. Although bulls defended the psychological level of $4,400.00, prices reversed sharply during US trading amid prominent profit-taking sell-offs, even plunging sharply at one stage, before closing at $4,334.04 per ounce, a single-day slump of 1.8%. Ahead of the release of Federal Reserve meeting minutes on Wednesday, US Treasury yields pulled back from multi-year highs, eASIng market jitters. Nevertheless, Washington and Tehran remain deadlocked with barely any signs of resumed negotiations. The Middle East crisis has driven up energy prices, and amid mounting inflation concerns, market focus will centre on the upcoming Fed meeting minutes. At press time, spot gold rebounded to $4,370.00 per ounce, though the short-term trend remains bearish.

Citing US officials, American news outlets report that US President Donald Trump told his negotiation team, including Vice President JD Vance, Envoy Witkoff and Kushner, not to engage with Tehran. Reports state that Trump is frustrated by Tehran’s refusal to yield to his demands, signalling his readiness to set ASIde the conflict for the time being. He intends to resume contacts only after Iranian leaders indicate willingness to strike the deal he seeks. Analysts believe the White House is shifting strategy to "strangle" Iran through long-term measures rather than launching further military strikes. The US and Iran still hold divergent views on the Strait of Hormuz and terms for ending hostilities. The 60-day negotiation period laid out in the memorandum of understanding expired on Monday, leaving prospects for future talks uncertain.

US government borrowing costs have climbed to their highest level since 2007, shaking confidence in global markets and among American consumers. The 30-year US Treasury yield briefly broke above 5.3% on Tuesday, a stark contrast to the loose monetary policy before the pandemic when yields once fell as low as 1%. Meanwhile, the fragile US-Iran ceasefire has collapsed, reviving fears that disrupted PeRSIan Gulf oil supplies will keep energy costs and inflation elevated. On Wednesday, global crude benchmark Brent crude topped $91 per barrel, up from roughly $72 during the recent ceasefire period. As the body governing short-term borrowing costs, the Federal Reserve has fuelled anxiety in the bond market. Fed Chairman Warsh is attempting to steer financial markets away from what he views as excessive central bank intervention. Compared with his predecessors, he has remained cautious in public remarks regarding inflation and the economy.

Short-term gold market outlook: Spot gold faces upside resistance at $4,495.00 per ounce, with downside support seen at $4,225.00 per ounce.

Spot Gold Daily Chart

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