Gold Rises Slightly, Dollar Weakens, but Yields Limit Gains
Gold prices rose slightly on Monday (May 18), helped by a weaker US dollar, making it more affordable for non-USD buyers. However, gains were capped as rising bond yields and persistently high oil prices kept inflation concerns and expectations of tighter monetary policy at bay.
Spot gold rose 0.2% to US$4,548.14 per ounce at 1:41 p.m. US time, after briefly touching its lowest level since March 30. US gold futures for June delivery closed down 0.1% at US$4,558.
The dollar index weakened about 0.3% against a basket of major currencies. Analysts consider the weakening dollar to be a short-term support, but gold's upside remains limited by rising yields, which increase the opportunity cost of holding non-yielding assets.
Global bond markets continued their decline, driven by inflation concerns triggered by rising energy prices related to the Iran war. The 10-year US Treasury yield rose to its highest level since February 2025, increasing pressure on gold amid the "higher interest rates for longer" narrative.
In energy markets, oil rose about 2% to a two-week high on concerns about supply disruptions, although it weakened earlier following Iranian media reports of a possible exemption from US sanctions for Iranian oil. Since the US-Israel war against Iran began on February 28, Brent has risen about 55%, while spot gold has fallen about 13.8% over the same period.
Several banks have begun lowering their near-term gold price projections due to weakening investor demand. J.P. Morgan cut its average gold price forecast for 2026 to US$5,243 per ounce from US$5,708.
The market is now monitoring the direction of US yields, dollar movements, oil dynamics, and developments in the Iran conflict, which will determine whether inflationary pressures and policy expectations continue to limit gold's recovery.
Source: Newsmaker.id
