<div id="readability-page-1"><div><figure></figure>Gold’s early-May rebound is starting to look more fragile.After rallying sharply earlier this month on hopes that easing US-Iran tensions would cool oil-driven inflation fears, bullion slipped on Wednesday as the macro backdrop turned less friendly.Spot gold fell 0.3% to $4,467.59 an ounce, while US gold futures dropped 0.9% to $4,471.10.The pressure came from familiar forces, including higher US Treasury yields and a firmer dollar, both of which make non-yielding gold harder to own.The move does not mean gold’s bull case has disappeared.Geopolitical risk remains elevated, oil prices are still high, and investors are waiting for the Federal Reserve’s latest policy signals.But for now, the market is sending a clear message that peace hopes alone are not enough to lift gold when yields and the dollar are moving against it.Higher yields put gold back on defensiveThe biggest drag on gold is coming from the bond market.US Treasury yields have risen as investors reassess the risk that inflation could stay hotter for longer. That matters because gold pays no income.When bond yields climb, the opportunity cost of holding bullion rises, making Treasuries and other interest-bearing assets more attractive by comparison.The 10-year Treasury yields were holding near their highest level in more than a year, adding pressure on bullion.This has become the key macro headwind for gold, as when geopolitical uncertainty supports safe-haven demand, higher yields can blunt that support quickly.The rate backdrop has also shifted.Philadelphia Fed President Anna Paulson said current interest rates are helping curb inflation, but also suggested rate hikes remain a possibility.That was enough to keep traders cautious ahead of the minutes from the Fed’s April policy meeting, due later on Wednesday.A firm dollar cuts into bullion demandThe second pressure point is the dollar.The US currency was trading near a six-week high, supported by haven demand and rising rate-hike expectations.A stronger dollar usually weighs on gold because bullion is priced in dollars.When the dollar rises, gold becomes more expensive for buyers using other currencies, which can reduce demand at the margin.That is exactly the setup gold is facing now.The dollar index was steady at 99.306 and up more than 1% in May, helped by safe-haven flows and the market’s growing belief that the Fed could still tighten policy later this year.Traders were pricing in more than a 50% chance of a December rate hike, according to CME FedWatch.This is a sharp change from the earlier narrative, when investors had been focused on possible rate cuts.For gold, the difference is crucial as a weaker dollar and falling rate expectations tend to act like fuel for bullion.</div></div>

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Gold prices are under pressure, with spot gold falling 0.3% to $4,467.59 and US gold futures down 0.9% to $4,471.10. The decline is attributed to rising US Treasury yields and a stronger dollar, which increase the opportunity cost of holding non-yielding gold. Despite these challenges, geopolitical risks and high oil prices keep the long-term bullish case for gold intact, as investors await signals from the Federal Reserve.

Gold prices weaken: two big reasons bullion is under pressure