Gold and Silver Prices Plummet on Rising Treasury Yields

Gold and silver prices plummeted to their lowest levels since August on Monday, September 28, as tensions between the US and Iran flared up. The 10-year Treasury yield reached a 19-year high of 5.23%, making gold less attractive to investors. Spot gold dropped from $4,215 to its lowest price in nearly two months, while silver broke below $61 and slid towards $60.90.

The sharp decline is not just due to the Iran tensions, but also because of rising Treasury yields. Higher rates make gold less appealing as it pays no yield, increasing the opportunity cost for holding the metal. The Federal Reserve's decision to raise interest rates again at its October 28 meeting is also contributing to the fall.

Citi analysts had warned about a potential drop in gold prices back in June 2025, predicting it could fall to $2,500 to $2,700 by the second half of 2026. While their timing and levels were off, their core concern that investor demand would fade as geopolitical headlines eased is now becoming a reality.

The market is waiting on the Fed's preferred inflation gauge and fresh US jobs data this week, which could either confirm the October hike case or undercut it. If the data comes in hot, gold has further to fall, but if not, this may just be a short-term correction in an otherwise strong year for gold.