Gold Falls Below $4,000 as Bond Yields Soar

Gold prices have been under pressure this week, finishing at $4,144.04 an ounce after a 3.4% weekly decline that has pushed the metal towards a psychological floor of $4,000.

The retreat has been driven more by the bond market than gold's own fundamentals. Yields on long-dated U.S. Treasuries climbed to their highest level since 2002 during the week, with the ten-year note touching 5.34%. This is a formidable headwind for non-yielding assets like gold, as investors tend to shun bullion when government debt pays more.

A firmer dollar compounded the pain, making gold more expensive for buyers outside the United States.

However, soft U.S. labor data briefly offered some relief, with September payrolls outside the farm sector rising by just 29,000, far short of the 90,000 economists surveyed by Reuters had projected. But fears of a persistently high rate environment ultimately outweighed the disappointing jobs report, and selling pressure returned.

Despite this, official-sector demand has continued to provide a cushion for gold prices. Morgan Stanley analyst Amy Gower points to large-scale purchases by monetary authorities in China and Poland, which remain reliable bulk buyers.