Gold prices dip as US Treasury yields surge to 2002 highs

Gold’s recent rally has hit a snag as the U.S. 10-year Treasury yield surged to 5.347%, its highest level since 2002. On the Korea Gold Exchange, the price of one don (3.75g) of gold dropped by 3,000 won to 787,000 won (approximately $590). This decline reflects broader market pressures, with international spot gold trading between $4,130 and $4,140 per ounce, down more than 26% from its January peak of $5,595.

The rise in Treasury yields is driven by persistent inflation concerns, highlighted by the ISM Services PMI prices-paid index reaching its highest level in over four years. A stronger dollar, fueled by instability in European bond markets, has also contributed to the downward pressure on gold prices. Despite these challenges, structural demand remains robust, with central banks purchasing an average of 91 tonnes of gold per month, far above the pre-2022 average of 17 tonnes.

Gold’s short-lived rebound in early October, following weaker-than-expected U.S. nonfarm payrolls, was quickly overshadowed by the yield surge. Analysts remain divided on gold’s future trajectory, with WalletInvestor forecasting a modest recovery to $4,300 per ounce by year-end, while Goldman Sachs maintains a more bullish long-term target of $5,400 per ounce for 2027. However, sustained high yields and inflationary pressures could continue to cap gold’s upside potential.