Gold futures on the New York Commodity Exchange rose on May 20, with the most active June 2026 contract gaining $60.8 to close at $4,546.2 per ounce, marking an increase of 1.36%.
The rebound in gold prices came after a nearly 2% decline the previous day, supported by a slight retreat in U.S. Treasury yields from multi-month highs and a modest dip in the U.S. dollar index. Additionally, a sharp drop in international oil prices further contributed to the precious metal's recovery.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, fell 0.24% to settle at 99.090 in late trading.
International oil prices tumbled over 5% on May 20, with WTI crude futures closing below $100 per barrel. This decline followed reports of positive signs for oil tanker traffic through the Strait of Hormuz. The Iranian Islamic Revolutionary Guard Corps Navy stated that within the past 24 hours, 26 vessels, including oil tankers, container ships, and other commercial ships, had passed through the strait under Iranian coordination and security assurances.
Despite the slight pullback in Treasury yields, analysts noted that yields remain elevated overall. This is due to ongoing uncertainty in the Middle East, rising inflation risks fueled by higher oil prices, and market expectations that major central banks, including the Federal Reserve, may need to maintain tighter monetary policies for an extended period or even raise interest rates.
On May 19, Philadelphia Fed President Anna Paulson commented that the Fed's monetary policy is "slightly restrictive," which helps curb inflationary pressures while maintaining stability in the labor market. Paulson added that if economic growth exceeds potential levels or inflationary threats emerge, the Fed might "appropriately raise interest rates."
Furthermore, the minutes from the Fed's April monetary policy meeting, released in the early hours of May 21 Beijing time, conveyed a strong hawkish signal. Against the backdrop of Middle East conflicts driving up energy prices and rekindling inflation pressures, the Fed is evidently shifting toward a more hawkish stance.
Looking ahead, the market continues to closely monitor the progress of U.S.-Iran negotiations. Indirect talks remain stalled due to disagreements over Iran's nuclear program, sustaining concerns about further escalation. Meanwhile, the U.S. Senate recently advanced a war powers resolution that could limit the president's ability to take military action against Iran without congressional approval.
With gold prices recently falling below the psychological threshold of $4,500 per ounce, short-term market focus has shifted to how long and deep this adjustment might last. Societe Generale commodity analysts noted that gold's recent drop below $4,500 per ounce introduces new downside risks for the precious metal.
In other trading, July silver futures rose 223.5 cents to close at $76.205 per ounce, an increase of 3.02%.
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