Gold faces pressure amid dollar strength

Gold prices may remain under pressure in the near term as a stronger US dollar, elevated bond yields, according to the World Gold Council.

The yellow metal extended its recent losses last week, with the LBMA Gold Price PM declining 0.8% to $4,151 per ounce. This has pushed gold nearly 5% lower on a year-to-date basis, reflecting a difficult environment for bullion and weakening short-term market confidence.

The council said market participants are closely watching whether the US Dollar Index, or DXY, can sustain its move above the key 100 level. 

A stronger dollar generally makes gold more expensive for overseas buyers, reducing demand and limiting upside potential. The report noted that the dollar’s recent gains were supported by the Fed’s hawkish pause, rising bond yields and stronger equity markets. 

These factors have increased expectations that interest rates may remain higher for longer, putting additional pressure on precious metals.  The June Federal Open Market Committee meeting also reinforced concerns over tighter monetary policy. 

The WGC said stronger inflation data could further strengthen the case for prolonged rate tightening, reducing the appeal of non-yielding assets such as gold, which typically performs better in a lower-rate environment. 

On the technical front, gold remains vulnerable after failing to recover meaningfully. Analysts highlighted key support at $4,075 per ounce, warning that a break below this level could trigger deeper corrections and fresh selling pressure in global markets.  However, geopolitical tensions in West Asia, uncertainty around Iran-related negotiations and broader inflation concerns continue to provide some support to bullion prices.  Despite positive global gold ETF flows, cautious positioning in the options market suggests investor sentiment remains guarded, with traders closely monitoring macroeconomic signals for clearer price direction.