Market sentiment remains caught between cooling economic data and the reality of stubborn long-end yields. Recent indicators, including weaker retail sales and softer CPI figures, have dampened expectations for a Federal Reserve rate hike in September. Current market pricing suggests a two-thirds probability that the central bank will maintain current rates, though the 10-year Treasury yield hovering near 4.7% continues to act as a drag on non-yielding assets like gold.

Geopolitical friction in the Strait of Hormuz adds a layer of complexity to the metal's performance. While the U.S. maintains the waterway is open, Iranian officials insist it remains inaccessible to shipping, contributing to an inflation-risk premium in energy markets. Investors are now turning their attention to the upcoming release of the Fed’s July meeting minutes, which may offer further clarity on the path forward for monetary policy. Meanwhile, global equity markets showed weakness overnight, with the Nikkei 225 falling 3.2% and the Kospi sliding 5.7%, reflecting broader investor caution as AI-linked shares remain under significant pressure.