Gold Prices Fell Nearly 2%, The Worst Threat Not Yet Over
Gold prices fell by 1.9% to US$4,481.28 per troy ounce on Tuesday, 19 May 2026, as the US dollar strengthened and persistent inflation concerns kept expectations for higher interest rates and Treasury yields elevated. The decline contrasted with a 0.6% gain on Monday, and yesterday’s close marked the lowest in more than three weeks, since 27 March 2026.
Prices edged higher on Tuesday 20 May 2026 at 06:30 WIB, with gold quoted at US$4,485.79 per troy ounce, up 0.1% as the market paused after the previous session’s drop. “We are seeing higher real interest rates in many countries, and that is weighing on gold. A stronger dollar is also a negative factor,” said Edward Meir, an analyst at Marex, to Refinitiv.
The US 10-year Treasury yield hovered near a one-year high, while the dollar firmed, both rising as investors awaited the possibility of the Fed adopting a hawkish stance to curb inflation driven by higher energy costs. Higher yields raise the opportunity cost of holding non-yielding gold, while a stronger dollar makes dollar-priced commodities more expensive for holders of other currencies.
Brent crude oil remained elevated on supply concerns, reinforcing fears of global inflation as energy costs rise. Inflationary pressures are prompting central banks to keep policy rates high to temper price gains. While gold is often viewed as an inflation hedge, it tends to come under pressure in a high interest-rate environment.
The market now sees limited room for rate cuts through 2026, with expectations shifting toward little or no change, or even tightening, by year-end. “Although the structural investment case for gold remains strong, near-term macro developments create a more challenging backdrop for prices,” wrote Ole Hansen, head of commodity strategy at Saxo Bank. “Once energy-related pressure eases, central-bank demand may again become the main driver.”
Market participants now await the minutes of the latest Federal Reserve policy meeting, scheduled for release on Wednesday.