Gold Prices Plunge Amid Rising Yields and Higher Rate Hike Expectations

Gold prices have been under pressure in recent days, falling to their lowest level since August 5 as investors turn to cash amid rising U.S. Treasury yields.

The spot gold price dropped 3% to around $4,156 per ounce, while spot silver prices plummeted nearly 5% to around $61.17 per ounce.

Traders are pricing in a 70.3% probability of another Fed rate hike in October, up from 64.2% the previous day, which adds pressure on gold as higher yields diminish its appeal compared to interest-bearing assets.

Ole Hansen from Saxo Bank noted that ETF demand remains robust, but rising credit stress could lead to a cash scramble, increasing short-term selling pressure while longer-term fiscal risks may still support gold.