Gold prices steadied near $4,130 an ounce on Thursday, pausing after a strong technical rebound as a surge in crude oil prices reignited expectations that the Federal Reserve may need to tighten policy further. The precious metal struggled to extend gains despite a modest decline in the dollar, with the two-year Treasury yield climbing to its highest level in 17 months.
Spot bullion traded at $4,132.01, little changed from the previous session, after reaching a peak of $4,165.87 on Wednesday—the highest since July 7. August futures slipped 0.4% to $4,134.60, reflecting the market's hesitation to push through key resistance levels.
Oil Shock Offsets Dollar Weakness
Brent crude rose above $95 a barrel, its highest in over six weeks, following fresh US strikes on Iran and attacks on Saudi-linked tankers in the Red Sea. The escalation has heightened the risk of simultaneous disruptions at the Strait of Hormuz and Bab el-Mandeb, two critical chokepoints for global energy shipments. For more on the broader oil supply shock, see Brent Breaks $92 as Second Oil Supply Shock Unfolds Across Key Chokepoints.
IndusInd Securities analyst Jigar Trivedi noted that the oil rally is keeping inflation and rate-rise concerns alive, preventing gold from fully benefiting from a softer dollar. The dollar index eased about 0.1%, which typically makes bullion more affordable for foreign buyers, but that support was offset by the two-year Treasury yield rising to approximately 4.30%—its highest level since February 2025.
Fed Meeting in Focus
Attention now shifts to the Federal Reserve's July 28-29 meeting. Policymakers are widely expected to leave rates unchanged, but their assessment of the oil shock and inflation outlook will be closely watched. Futures markets are pricing a 77% probability of a quarter-point rate 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 signal whether other central banks are becoming equally concerned about energy-driven inflation.
Technical Levels to Watch
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 toward $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. For a look at silver's recent strength, see Silver Holds Above $57 for Third Session as Bulls Eye Trendline Breakout.
The interplay between rising oil prices, Treasury yields, and the dollar will likely determine gold's next move. With the Fed meeting just days away, traders are bracing for potential volatility as the market seeks confirmation of a sustained breakout.
This article is for informational purposes only and does not constitute financial advice.
