Gold Price Falls on Rising Treasury Yields and Fed Rate Hike Expectations

The price of gold has fallen to its lowest level in several months as rising US Treasury yields and expectations of additional Federal Reserve rate hikes dampen demand for the non-yielding metal. The price of gold fell by as much as 4% on Monday, dropping to $4,111 an ounce, its lowest since August 5.

This decline comes as oil prices climb amid a stalemate in US-Iran talks and the yield on the 10-year Treasury note touches its highest level since June 2007. Adrian Ash, head of research at online bullion marketplace BullionVault, said that 'Today's fresh multi-decade highs in US borrowing costs have finally seen the gold price give way.'

The gold market is particularly sensitive to interest-rate expectations, and has risen sharply this month as markets price in a roughly 70% chance of a second consecutive Fed rate hike in October. This increase in interest rates tends to weigh on gold because investors can earn higher returns on interest-bearing assets, while financing costs for speculative positions also rise.