Gold eases but holds near three-month high as oil and yields decline

Gold eases but holds near three-month high as oil and yields decline

Fiona Craig

Wed, August 26, 2026 at 12:20 PM GMT+3 3 min read

Gold prices edged lower on Wednesday but remained close to a three-month high, with falling oil prices and lower US Treasury yields helping to ease inflation concerns as investors monitored diplomatic efforts involving Iran and Oman over the Strait of Hormuz.

At 01:10 ET, or 05:40 GMT, XAU/USD was down 0.4% at $4,642.38 an ounce, while gold futures gained 0.1% to $4,699.04.

Elsewhere in precious metals, XAG/USD rose 0.7% to $69.05 an ounce and XPT/USD advanced 0.3% to $1,866.89. The US Dollar Index increased 0.1% to 99.01.

Falling oil and Treasury yields provide support for gold

Gold has risen more than 7% over the past week, leaving the precious metal close to the three-month high reached during the previous session.

The rally has been supported by declining US Treasury yields and weaker oil prices, which have reduced some of the inflation concerns that could otherwise discourage the Federal Reserve from lowering interest rates.

Treasury yields fell by around five to seven basis points across the curve on Tuesday, while crude prices declined amid increasing optimism that tensions in the Middle East could ease.

Iran and Oman have held discussions over establishing a "temporary joint maritime corridor" that could allow some shipping activity to resume through the Strait of Hormuz.

Lower energy prices can be supportive for gold because oil is an important contributor to inflation. A sustained increase in crude prices could encourage the Fed to maintain higher interest rates for longer.

Because bullion does not generate interest, elevated yields can reduce its appeal relative to income-producing assets. Conversely, lower yields can make gold comparatively more attractive.

Debasement trade remains in focus

Gold's recent strength has also maintained investor interest in the Treasury-related debasement trade.

ANZ analysts said Treasury Secretary Scott Bessent had provided no additional indication regarding debt-management changes announced last week.

However, reports have suggested that the Treasury could use part of its cash holdings to finance repurchases of older securities carrying higher yields.

Concerns surrounding government borrowing, fiscal policy and the long-term purchasing power of currencies have helped reinforce demand for gold as an alternative store of value.

PCE inflation and Warsh speech become next major tests

Investors are now looking towards two potentially significant catalysts for gold: Wednesday's US Personal Consumption Expenditures inflation report and Federal Reserve Chair Kevin Warsh's first major speech at the Jackson Hole symposium on Friday.

The PCE figures will provide another indication of inflationary pressures and conditions across the US economy, potentially influencing expectations for the direction of monetary policy.

Boston Fed President Susan Collins has said she supports leaving interest rates unchanged for now, provided inflation continues moving towards the central bank's 2% target.

Warsh's Jackson Hole appearance could meanwhile offer greater clarity on how the Fed views the trade-off between persistent inflation risks and the broader economic outlook.

Investors will be particularly interested in any indication of when policymakers could be prepared to adjust interest rates in response to changing inflation conditions.

Warsh has faced criticism over uncertainty surrounding his economic views, making Friday's address a potentially important event for interest-rate expectations and precious metals markets.

Gold's recent advance has also revived the so-called debasement trade that contributed to bullion's rally in 2025, as investors increasingly consider the metal an alternative to sovereign bonds and currencies during periods of heightened concern over deficits, fiscal policy and the purchasing power of fiat money.

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