Gold rises to its highest price since 5 June as higher oil prices reduce demand for non-yielding assets. Investors continue attempting to determine if the Federal Reserve will hike interest rates in September. Market pricing is now focused on the Consumer Price Index tomorrow afternoon and the US bond sale later in the year.

Bond yields can apply excessive pressure on Gold due to the metal being a non-yielding asset. The 10-year Treasury yield is trading 17 basis points higher on Tuesday and are close to breaking 2026 highs. The higher yields rise, the more likely demand for Gold is to fall from investors.

President Trump and Higher Oil Prices

Oil prices have now risen for two consecutive days and continue to rise during this morning’s Asian session. Crude oil prices are now trading at their August high and are applying pressure on investor sentiment ahead of the upcoming inflation release (CPI).

Iran is demanding major US concessions before fully reopening the Strait of Hormuz, including an end to sanctions and the blockade of Iranian ports, the release of frozen assets, and compensation for war damage. This is something the US will, without a doubt, refuse. In response, the US president also added similar requests, which were not previously made.

Donald Trump told journalists that he requires Iran to pay compensation for people killed and wounded by Iranian actions, and for damages and deaths in Lebanon and Gaza. Due to this, the possibility of a deal and the reopening of the strait remains dim. This is the key reason for oil prices rising and almost forming a full bullish correction.

Higher oil prices are a particular issue due to the timing. The market had been pricing in a prolonged pause due to weak employment data and expectations that inflation will fall. However, if oil continues to increase over the next 24 hours, even if inflation does fall, the effect will not be the same.

Crude Oil - Technical Analysis

From a technical perspective, Crude Oil remains bullish in the short term following the strong rebound above the $80.00 level. Holding above $80 would keep buyers in control, according to indicators, with $84.00 and $85.00 acting as the next potential targets. A break back below $80.00 could bring bearish signals back into focus. However, overall, momentum remains positive, but volatility is likely to depend on geopolitical developments that continue to drive the price.

Gold - Oil Prices Dim Hopes of Fed Cut Ahead of Key Inflation Report

Gold is actively declining for three reasons. The first is that the price is trading relatively high in comparison to recent price ranges. Due to this, investors are opting to cash in profits ahead of the CPI announcement. Investors also note that the market is experiencing a slightly risk-off appetite, also meaning investors are not looking to risk trading in the wrong direction. In addition to this, higher bond yields and a US Dollar recovery are pressuring Gold. The US Dollar has now almost fully recovered after Friday’s sharp decline.

However, the key drivers are higher oil prices and tomorrow’s Consumer Price Index (CPI). The main consensus is that inflation will slightly fall from 3.5% to 3.4%. The decline is a positive for Gold, but investors continue to note that the rate of inflation remains considerably elevated. The inflation rate falling to 3.4% would be a positive sign if oil prices were also decreasing. However, due to oil prices rising again, investors would be looking for a stronger decline in order to support Gold prices.

If inflation declines to 3.2-3.3%, Gold may remain in bullish momentum and aim for the next key psychological price at $4,500. However, if oil keeps rising and inflation stays high, Gold could come under pressure again, as seen throughout 2026.

Key Takeaway Points:

• Gold is under pressure from higher bond yields, a stronger US Dollar, and profit-taking ahead of CPI.
• Oil prices remain bullish as US-Iran tensions reduce hopes of reopening the Strait of Hormuz.
• Tomorrow’s CPI is crucial for expectations around a potential September Fed rate move.
• A softer CPI near 3.2-3.3% could support Gold, while sticky inflation and rising oil could trigger further downside.