Gold held near $4,130 an ounce on Thursday as investors weighed a weaker dollar against rising oil prices and the sharpest increase in short-term Treasury yields in more than a year.
Spot bullion was little changed at $4,132.01 after reaching $4,165.87 on Wednesday, its highest level since July 7.
August futures slipped 0.4% to $4,134.60.
The pause followed a strong technical rebound from below $4,000, but the market is struggling to extend gains as the Middle East conflict strengthens expectations that the Federal Reserve may need to tighten policy again.
Oil shock blunts support from a softer dollar
Brent crude climbed above $95 a barrel, its highest level in more than six weeks, after another round of US strikes on Iran and attacks on Saudi-linked tankers in the Red Sea.
The escalation has increased the risk of simultaneous disruption around the Strait of Hormuz and Bab el-Mandeb, two critical routes for global energy shipments.
IndusInd Securities analyst Jigar Trivedi said the oil rally was keeping inflation and rate-rise concerns alive, preventing gold from fully benefiting from a modest decline in the dollar.
The dollar index eased about 0.1%, which normally makes bullion more affordable for buyers using other currencies.
That support was offset by the two-year Treasury yield’s rise to about 4.30%, its highest level since February 2025.
Fed meeting becomes the decisive test
Attention is shifting to the Federal Reserve’s July 28-29 meeting.
Policymakers are widely expected to leave rates unchanged, making their assessment of the oil shock and inflation outlook more important than the immediate decision.
Futures markets priced a 77% probability of a quarter-point increase in September, reflecting concern that higher energy and transport costs could reverse some of June’s improvement in inflation.
Elevated interest rates tend to pressure gold because the metal offers no yield.
The European Central Bank also meets on Thursday and is expected to keep its deposit rate at 2.25% after raising borrowing costs in June.
Its guidance may show whether policymakers elsewhere are becoming equally concerned about energy-driven inflation.
Gold’s breakout still needs confirmation
Gold’s retreat from Wednesday’s peak leaves $4,165-$4,170 as the immediate resistance zone.
A sustained break above that range would reinforce the recovery and open the way towards $4,200.
On the downside, $4,100 is the first level to watch. A move below it could return attention to the psychologically important $4,000 mark, where buyers emerged earlier this week.
Other precious metals advanced. Silver rose 0.3% to $59.90, platinum gained 0.7% to $1,656.24 and palladium climbed 0.8% to $1,301.25.
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