By: Economy Middle East

Gold prices edged lower on Wednesday after touching a seven-month low in the previous session, as higher U.S. Treasury yields weighed on the non-yielding metal. Lingering uncertainty over the prospects for a lasting U.S.-Iran peace agreement also kept inflation concerns and expectations of further Federal Reserve rate hikes in focus.

As of 5:00 GMT, spot gold slipped 0.83 percent to $3,974.37 an ounce, after falling to as low as $3,942.99 in the previous session, its weakest level since last November. U.S. gold futures for August delivery fell 1.31 percent to $3,985.37 on Wednesday.

In the UAE, gold rates declined, with 24-carat gold losing AED6 to AED479.25 and 22-carat gold falling AED5.5 to AED443.75.

In addition, 21-carat gold edged AED5.25 lower to AED425.5, while 18-carat gold fell AED4.5 to AED364.75.

Meanwhile, 14-carat gold fell AED3.5 to AED284.5.

Fed rate hike bets and stronger dollar pressure bullion

Gold prices posted their steepest quarterly decline since 2013 in the second quarter and extended losses for a fourth straight month in June. Bullion came under pressure as heightened Middle East tensions fueled inflation concerns, strengthening expectations that the Federal Reserve could keep interest rates higher for longer or raise them further.

The U.S. dollar also strengthened on Wednesday, making dollar-denominated gold more expensive for buyers using other currencies, while benchmark 10-year Treasury yields also moved higher, adding further pressure on bullion.

Sentiment was also weighed down by comments from Cleveland Federal Reserve President Beth Hammack, who said on Tuesday that she could support additional interest rate increases if inflation remains persistent, reinforcing expectations that the Fed will maintain a hawkish policy stance.

Markets are now pricing in a roughly 67 percent chance of a September rate hike, according to the CME FedWatch Tool, reflecting growing expectations of tighter monetary policy.

Investors await key data to gauge Fed’s rate trajectory

Gold prices had already been under pressure since the outbreak of the U.S.-Israel conflict with Iran, but most of their recent declines were concentrated in June as rising inflation signals and a more hawkish Federal Reserve unsettled metal markets. The Fed’s June meeting revealed that several policymakers supported the possibility of at least one interest rate hike this year, marking a notable shift from earlier expectations that the central bank would begin cutting rates in 2026.

Persistent inflation concerns—amplified by elevated oil prices linked to the Middle East conflict—were a key factor driving this reassessment of the policy outlook. Markets are now looking ahead to an address by Federal Reserve Chair Kevin Warsh later on Wednesday for additional signals on U.S. monetary policy and the interest rate outlook.

Investors are also awaiting June ADP private employment data later on Wednesday, followed by the closely watched nonfarm payrolls report on Thursday, for further clues on the Federal Reserve’s interest rate trajectory and its implications for gold prices.

Other precious metals

As gold prices declined, the precious metals market witnessed downward movement. Spot silver fell 1.6 percent to $57.64 per ounce, platinum slipped 0.7 percent to $1,540.25 after touching its lowest level since last November, and palladium declined 0.6 percent to $1,197.40.