Gold steadies after hitting over 1-1/2-month low on robust yields

By Pablo Sinha

May 18 (Reuters) – Gold prices were steady on Monday as investors bought the metal after it fell to a 1-1/2-month low following inflation fears that triggered a rout in the global bond market.

Spot gold was steady at $4,539.48 per ounce as of 0724 GMT, after hitting its lowest level since March 30 earlier in the session.

US gold futures for June delivery lost 0.4% to $4,543.

Oil prices hit a two-week high after a drone strike caused a fire at a nuclear power plant in the UAE, officials said on Sunday. [O/R]

Benchmark 10-year US Treasury bond yields rose to their highest level since February 2025 on Monday, while 10-year Japanese government bond yields reached levels last seen in October 1996.

“The sell-off at the long end of U.S. Treasuries has implied that long-term interest rates are potentially on the rise, which indirectly creates a higher opportunity cost for holding gold,” said Kelvin Wong, senior market analyst at OANDA.

Since the yellow metal does not earn interest, the expectation that interest rates will rise has put pressure on gold prices.

Markets are increasingly pricing in a rate hike by the US Federal Reserve before the end of the year, with a 50% chance of a hike by December, according to CME Group’s FedWatch tool. [FEDWATCH]

JP Morgan said late Sunday that it had lowered its 2026 average gold price forecast to $5,243 per ounce from $5,708, citing weak near-term demand for the precious metal.

“Gold is technically stuck in no-man’s land, trudging around $4,340/ounce above the 200-day moving average, and is currently capped at $4,730/ounce below the 50-day moving average,” the bank said, adding that expectations for a Fed rate hike have currently put gold on the back burner for most investors.

Spot silver decreased by 0.5 percent to $75.60 per ounce, platinum decreased by 0.1 percent to $1,970.74, and palladium decreased by 1.1 percent to $1,396.74.

(Reporting by Pablo Sinha and Swati Verma in Bengaluru; Editing by Sherry Jacob-Phillips, Rashmi Aich and Harikrishnan Nair)