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Gold Prices Drop More Than 1% Under Pressure from US Dollar and High Yields
Global gold prices fell more than 1% on Tuesday (5/19/2026), pressured by the strengthening US dollar and surging US government bond yields amid ongoing inflation concerns.
According to Reuters, spot gold prices declined 1.4% to $4,503.98 per ounce at 1:45 PM local time. Throughout the trading session, gold even touched its lowest level since March 30.
Meanwhile, US gold futures for June delivery closed down 1% at $4,511.20 per ounce.
The pressure on gold comes as the yields on 10-year US Treasury bonds approach their highest level in over 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 Federal Reserve (The Fed) in controlling inflation driven by rising energy prices.
Marex analyst, Edward Meir, said that rising real interest rates in various countries are the main factor weighing on gold movements. The strengthening US dollar also worsens the pressure on the precious metal.
The increase in bond yields makes the opportunity cost of holding gold higher since gold does not generate yields.
Meanwhile, the US dollar's strength makes dollar-denominated commodities more expensive for investors using other currencies.
On the other hand, Brent crude oil prices remain above $110 per barrel amid concerns over global supply. This fuels fears that global inflation will continue to rise as energy and fuel costs increase.
High inflation prompts central banks to keep interest rates high to curb price pressures. Although gold is known as an inflation hedge, the precious metal tends to be pressured when high interest rates persist for a long time.
The market now sees limited chances of the Fed cutting interest rates until most of 2026. Expectations are even shifting toward maintaining or tightening rates again by the end of the year.
Saxo Bank commodity strategist, Ole Hansen, assesses that the long-term outlook for gold remains fairly strong. However, macroeconomic developments in the short term create greater challenges for gold prices.
He added that when pressure from rising energy prices begins to ease, central bank demand for gold could once again become a key driver of the market.
Market participants are now awaiting the release of the latest Fed policy minutes scheduled for Wednesday US time to look for clues on the next interest rate move.
Not only gold, but other precious metals also weakened. Spot silver prices fell 4.1% to $74.53 per ounce after touching a two-week low.
Platinum corrected 2.2% to $1,936.10 per ounce, and palladium plummeted 4.2% to $1,359.26 per ounce.
However, J.P. Morgan still projects platinum prices could reach $2,400 per ounce in Q4 2026. The investment bank also estimates palladium could potentially rise to $1,600 per ounce during the same period.