Bond Yields Weigh on Gold, But May Strengthen Its Case in the Long Run

Gold prices have been pressured by rising US Treasury yields and a stronger dollar, causing gold to trade near $4,262 an ounce as of September 24. According to Ole Hansen, Head of Commodity Strategy at Saxo, higher real yields make bonds more attractive relative to gold, which pays no interest.

However, Hansen suggests that these same forces could eventually support demand for the metal if higher borrowing costs intensify financial strains. He points out that investors are still flowing into gold, with holdings in gold-backed exchange-traded funds increasing by nearly 50 tonnes since the start of September.

Hansen also notes strong Chinese demand, which has exceeded 1,000 tonnes in the first eight months of 2026, surpassing the amount recorded throughout 2025. He argues that this demand, together with central bank purchases, provides a source of support that is less sensitive to short-term changes in US interest rates.

Gold-mining shares have come under pressure due to lower gold prices and rising operating costs, particularly fuel costs. The VanEck Gold Miners ETF fell by about 3% over the September 23-24 sessions, while the VanEck Junior Gold Miners ETF declined by approximately 3.5%.