Gold Is Caught Between Falling Fed Bets and Rising Treasury Yields

Gold is trying to stabilize after Tuesday's pullback, but the broader picture has become more complicated.

The softer US inflation data have taken some pressure off the metal by cooling expectations for another Fed rate hike. A weaker dollar has also helped keep buyers interested, while ongoing

tensions around Iran and the Strait of Hormuz continue to provide a safe-haven bid.

But the bond market is telling a different story.

US Treasury yields moved sharply higher on Tuesday, with the 30-year yield reaching its highest level since 2007. Rising long-term yields are making it harder for gold to extend its rally, particularly as gold offers no income of its own.

That leaves gold caught between two forces. Softer US data and a weaker dollar are supportive, while higher yields and rising oil prices are keeping the upside in check.

The technical picture reflects that tension.

XAU/USD remains below the 100-day SMA near $4,385, so the broader near-term bias is still cautious. At the same time, prices are holding above the 20-day Bollinger middle band around $4,210, while the RSI near 58 shows that buying momentum has recovered without looking stretched.

The first hurdle is $4,385. A daily close above the 100-day SMA would take some pressure off the bearish setup and bring the upper Bollinger Band near $4,500 back into view.

On the downside, $4,210 is the level to hold. A break below the middle band would weaken the current rebound and expose the lower Bollinger Band around $3,915.

For now, gold is being pulled in opposite directions. The Fed outlook and dollar are giving it some breathing room, but the rise in long-term Treasury yields is making it difficult for buyers to regain full control.

The next move may come down to which side gives way first: falling rate expectations or rising yields.