Gold Craters as Treasury Yields Soar Amid Fed Hawkishness

Gold prices plummeted on Wednesday as the US dollar strengthened and Treasury yields soared to multiyear highs. The benchmark 10-year yield rose as high as 5.14%, its highest level since July 2007, while the two-year note reached 4.94%, a level not seen since June 2024.

Market experts attribute this move to Federal Reserve policymakers reaffirming their support for last week's rate hike and warning of inflation risks. Fed Bank of Chicago President Austan Goolsbee stated that the central bank may need to treat the current energy shock as a persistent source of inflation, rather than expecting it to fade on its own.

This hawkish tone from Fed officials has led traders to build in expectations of at least one more rate hike before the end of the year. As a result, gold is under pressure, with front-month Comex gold falling 1.3% to $4,281.30/oz, its lowest settlement value since August 6.