Gold holds firm amid fed rate concerns

May 20, 2026 (MLN): Gold prices traded in a narrow range on Wednesday as stronger U.S. economic signals and elevated Treasury yields weighed on bullion demand, while optimism surrounding a possible easing of tensions between the United States and Iran limited safe-haven buying.

Currently, spot gold is down 1.58% to $4,485.64 an ounce as of [2:59 pm] PST, according to data reported by Mettis Global.

The U.S. dollar remained close to a six-week high, reducing the appeal of gold for investors holding other currencies since bullion is priced in greenbacks, according to Reuters.

Meanwhile, benchmark 10-year U.S. Treasury yields stayed near their highest level in more than a year as persistent energy-driven inflation concerns strengthened expectations that the Federal Reserve could maintain a tighter monetary stance for longer.

Higher bond yields typically pressure gold, as the precious metal does not offer any interest return, increasing the opportunity cost of holding it.

According to a Reuters survey, most economists now expect the Federal Reserve to keep interest rates unchanged through 2026, delaying earlier expectations of rate cuts to 2027 amid views that the current inflation spike may prove temporary.

Investor expectations for tighter monetary policy also increased, with CME FedWatch data indicating markets are pricing in nearly a 40% probability of a U.S. rate hike by December this year.

Sentiment across financial markets improved after U.S. President Donald Trump stated that the conflict with Iran could conclude “very quickly,” while Vice President JD Vance signaled progress in diplomatic discussions with Tehran aimed at ending hostilities.

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