Gold Prices Plummet by 4% Amid Rising U.S. Treasury Yields

Gold prices plummeted by 4% on September 28, marking their biggest one-day drop in three months. The decline was largely attributed to rising yields on U.S. Treasury bonds and expectations of further Fed rate hikes, according to Freedom analyst Vladimir Chernov.

The increasing yields make U.S. government bonds more attractive to investors, who can lock in a higher return without the risk of gold not generating interest income. As long as these expectations persist, gold's ability to recover is hindered, says Chernov.

Central banks and seasonal demand in India are expected to continue supporting gold prices, but the analyst does not expect a prolonged price collapse. A more sustainable rebound in gold may occur after signs emerge that inflation is easing, which could lead to a decrease in government bond yields and an end to Fed rate hikes.