Gold Prices Surge Despite Triple Threat from Strong Dollar, Rising Yields, and Oil
Jakarta, CNBC Indonesia – Gold prices surged again amid hopes of a diplomatic breakthrough between the United States and Iran.
Such a breakthrough could potentially cool the spike in energy prices and reduce expectations that the Federal Reserve (the Fed) will maintain an aggressive (hawkish) monetary policy stance.
According to Refinitiv, gold closed at US$4,076.29 per troy ounce in Tuesday’s trading (21/7/2026), soaring 1.76%.
The rise was welcome news after prices eased 0.27% on Monday. The closing price was also the highest since 10 July 2026.
On Wednesday (22/7/2026) at 06.29 WIB, gold strengthened 0.13% to US$4,081.38 per troy ounce.
“Commodities in general rose because the market is hoping that a ceasefire in the Middle East is beginning to find some light at the end of the tunnel,” said Marex analyst Edward Meir, quoted from Refinitiv.
According to Meir, gold also received support from technical buying after successfully breaking through the short-term downtrend that had been in place since 6 July.
Nevertheless, he predicted that gold prices would continue to move within a limited range in the near term.
A senior Iranian official said that Tehran had accepted a proposal from mediators for a 10-day ceasefire in an effort to salvage the interim deal previously reached.
Thus far, high oil prices resulting from supply disruptions in the Gulf region have actually weighed on gold, as they trigger inflation concerns and strengthen expectations that interest rates will remain higher for longer.
Although gold is known as a long-term hedge against inflation, high interest rates increase the opportunity cost of holding assets that generate no yield, such as gold.
Investors are now awaiting the Federal Reserve’s interest rate decision and remarks from Fed Chairman Kevin Warsh following the two-day monetary policy meeting next week.
Based on the CME FedWatch Tool, market participants estimate a roughly 68% chance that the Fed will raise interest rates again in September.
In its notes, Commerzbank said the psychological level of US$4,000 per troy ounce remained firmly intact as a support area for gold prices. However, concerns over the direction of US interest rates are expected to limit any larger recovery in gold prices.
Gold Rises Despite Rising Dollar, US Treasury Yields and Oil Prices
The rise in gold prices was particularly striking because it occurred amid a jump in the dollar index and US Treasury yields.
The dollar index climbed to 101.173 in yesterday’s trading, its highest level since 1 July 2026. Meanwhile, US Treasury yields surged to 4.628%, their highest level since 19 May 2026.
Gold prices usually plummet as soon as the dollar index and US Treasury yields rise. This is because gold purchases are converted into US dollars, so a rise in the index makes gold more expensive for holders of other currencies.
Gold also offers no yield, so rising US Treasury yields usually put immediate pressure on gold prices.
Gold prices also held higher even as oil prices climbed back up to US$91.01 per barrel, their highest level since 10 June 2026. Since the war began, gold has been highly sensitive to oil price movements.
Rising oil prices usually send gold falling immediately, as higher oil prices can fuel inflation and threaten interest rate hikes.