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Gold Prices Drop by More Than 1% Under Pressure from the US Dollar and High Yields

Global gold prices fell by more than 1% on Tuesday (19/5/2026), pressured by a strengthening US dollar and a surge in US government bond yields amid concerns that inflation remains high.

Citing Reuters, spot gold fell 1.4% to US$ 4,503.98 per ounce at 13:45 local time. During the trading session, gold even touched its lowest level since 30 March.

Meanwhile, US gold futures for June delivery closed down 1% at US$ 4,511.20 per ounce.

The pressure on gold comes as the yields on US government bonds with a 10-year tenor move toward the highest level in more than a year.

At the same time, the US dollar also strengthened as market participants began to anticipate a more aggressive, or hawkish, stance from the US central bank, the Federal Reserve (The Fed), as it seeks to curb inflation driven by rising energy prices.

Marex analyst Edward Meir said that the rise in real interest rates across various countries is the main factor weighing on gold’s price movement. The strengthening US dollar also worsens pressure on this precious metal.

The increase in bond yields raises the opportunity cost of holding gold because gold does not offer yields.

Meanwhile, a stronger US dollar makes dollar-based commodity prices more expensive for investors using other currencies.

On the other hand, Brent crude oil prices are still holding above US$ 110 per barrel amid concerns about global supply. This is fueling fears that global inflation will continue to rise as energy and fuel costs increase.

High inflation encourages central banks to keep interest rates at high levels to dampen price pressures. Although gold is known as an inflation hedge, the precious metal tends to face pressure when high interest rates persist for a long time.

The market now sees limited scope for the Fed to cut interest rates through most of 2026. Even expectations are starting to shift toward keeping rates unchanged or tightening them again by the end of the year.

Saxo Bank commodity strategy head Ole Hansen believes the long-term outlook for gold is still fairly strong. However, macroeconomic developments in the short term are creating bigger challenges for gold prices.

He added that when pressure from the surge in energy prices begins to ease, demand for gold from central banks could potentially return as the market’s main driver.

Market participants are now awaiting the release of the latest Fed policy minutes scheduled to be published on Wednesday US time to look for clues on the next interest-rate direction.

Not only gold, but other precious metals also weakened. Spot silver fell 4.1% to US$ 74,53 per ounce after briefly hitting its lowest level in about two weeks.

Platinum was down 2.2% to US$ 1.936,10 per ounce, and palladium plunged 4.2% to US$ 1.359,26 per ounce.

Even so, J.P. Morgan still projects that platinum prices could reach US$ 2.400 per ounce in Q4-2026. The investment bank also estimates that palladium could rise to US$ 1.600 per ounce over the same period.