Gold prices fell 2% on Friday amid rising Treasury yields and a stronger U.S. dollar, which decreased gold’s appeal as an investment. Coupled with increasing oil prices and ongoing tensions in the Middle East, expectations for higher interest rates have been reinforced.
By 1000 GMT, spot gold was down 2.2% at $4,546.45 per ounce, marking its lowest level since May 5, and was on track for a weekly loss of 3.6%. U.S. gold futures for June delivery dropped 2.9% to $4,550.80.
Rising Yields and Stronger Dollar Pressure Gold
The benchmark 10-year U.S. Treasury yields reached a near one-year high, contributing to an increased opportunity cost for holding non-yielding gold. Additionally, a firmer dollar rendered dollar-priced gold more expensive for international buyers.
“Yields and the dollar are higher due to heightened inflationary concerns, partly a result of the Gulf hostilities, compounded by April’s Producer Price Index (PPI) and Consumer Price Index (CPI) data released this week,” explained Rhona O’Connell, an analyst at StoneX.
Brent crude oil prices surged by 7.8% this week, resting above $109 per barrel, as the Strait of Hormuz remains mostly closed. Increased fuel prices can pressure inflation, as manufacturers are likely to pass on the costs, which could compel central banks to maintain elevated interest rates. This dynamic further diminishes the attractiveness of non-yielding gold.
Inflation Fears Reduce Hopes of Rate Cuts
This week’s inflation data indicates that consumers and businesses are beginning to experience significant price increases due to the ongoing conflict. Traders have almost entirely ruled out U.S. interest rate cuts for this year, according to CME’s FedWatch Tool.
“Gold has been cautious of the Gulf war for some time, and recent news from India regarding increased import duties has intensified tensions in an already fragile market,” O’Connell added. Notably, gold discounts in India reached record levels this week due to a substantial hike in import duties.
Other Precious Metals Also Head for Weekly Losses
Independent analyst Ross Norman noted, “Longer term, the outlook remains constructive for higher prices, but in the short term, gold’s trajectory is unpredictable as uncertainty pervades the news.”
Spot silver declined 7.2% to $77.46 per ounce, platinum fell by 2.9% to $1,996.34, and palladium decreased by 1.4% to $1,417.18. All three precious metals were also on course for weekly losses.
Published on May 15, 2026
