monsitj/iStock via Getty Images A stronger U.S. dollar and rising Treasury yields pressured gold and silver on Thursday, revers ing early gains, as concerns rose that the escalating conflict in the Middle East could drive up inflation. Gold briefly climbed above $5,400/oz on Monday as the start of the U.S.-Israel air attack on Iran drove safe-haven demand, but later eased as the dollar attracted...
monsitj/iStock via Getty Images A stronger U.S. dollar and rising Treasury yields pressured gold and silver on Thursday, revers ing early gains, as concerns rose that the escalating conflict in the Middle East could drive up inflation. Gold briefly climbed above $5,400/oz on Monday as the start of the U.S.-Israel air attack on Iran drove safe-haven demand, but later eased as the dollar attracted its own flight-to-safety flows. The U.S. dollar index added 0.5% on Thursday, making dollar-priced bullion more expensive for overseas buyers, and benchmark U.S. 10-year Treasury yields rose to a three-week high, raising the opportunity cost of holding non-yielding gold. "The market is looking at higher oil prices and the potential for inflation, while higher Treasury yields usually aren't great for gold," TD Securities global head of commodity strategy Bart Melek said in a note. However, gold still boasts supportive fundamentals, Melek said, as "we're going to at some point start seeing evidence of significantly higher deficit in the U.S... and a massive amount of uncertainty." The dollar's strength could continue weighing on gold prices, Phillip Nova's Priyanka Sachdeva said in a note, adding that the unexpected surge in the dollar likely played a role in some profit-taking in gold, despite the widening Middle East conflict. Inflation fears have revived, along with the possibility of fewer Federal Reserve rate cuts this year, given higher energy prices, but gold has still gained ~17% YTD despite retreating from $5,400, Sachdeva said. U.S. gold and silver futures both settled 1.1% lower on Thursday, with the front-month Nymex March contracts for gold ( XAUUSD:CUR ) and silver ( XAGUSD:CUR ) closing at $5,065.30/oz and $81.687/oz, respectively. ETFs: ( GLD ), ( GDX ), ( GDXJ ), ( IAU ), ( NUGT ), ( PHYS ), ( GLDM ), ( AAAU ), ( SGOL ), ( RING ), ( BAR ), ( OUNZ ), ( SLV ), ( PSLV ), ( SIVR ), ( SIL ), ( SILJ ) More on gold and silver Commodities: Putin's Gas Threat T...