Gold Prices Plummet to Seven-Week Low Amid Treasury Yield Surge
Spot gold prices plummeted to their lowest level in seven weeks on Monday as Treasury yields and expectations for another Federal Reserve rate hike weighed on investor demand.
The precious metal fell 3% to around $4,156 per ounce, its lowest price since August 5. Silver prices were hit even harder, declining nearly 5% to about $61.17 an ounce.
According to UBS analyst Giovanni Staunovo, higher oil prices and growing expectations for additional US rate hikes are the main drivers behind gold's recent weakness. He noted that the environment could keep real yields and the dollar elevated, increasing the opportunity cost of owning gold.
Veteran commodities expert Ole Hansen warned that gold's resilience is facing its 'toughest test yet' due to rising credit stress and a stronger dollar. However, economist Peter Schiff took a more bullish view, arguing that while rising bond yields are dragging gold lower now, their potential impact on economic growth, federal deficits, and inflation could ultimately support precious metals.