Gold Selloff Continues Amid Rising Interest Rates and Oil Prices

The SPDR Gold Trust (GLD) experienced its worst day in over two months, plummeting nearly 4% to $377.92 and leaving it 26% below its 52-week high of $509.70. This drop is largely attributed to the rise in interest rates, with the 10-year Treasury yield reaching 5.24%, its highest since 2007.

The increase in yields has raised gold's opportunity cost, making other investments more attractive. As a result, investors have been selling their gold holdings, leading to a decline in price. The fund's mechanics also play a role, as GLD simply holds bullion and tracks its price, mirroring the metal's performance.

Oil prices have also contributed to the selloff, with rising tensions between Iran and the US pushing oil prices higher. This has led traders to expect higher inflation, which in turn raises the likelihood of further interest rate hikes.

BMO cut its fourth-quarter 2026 gold forecast to $4,650 an ounce from $4,750, citing monetary devaluation and Chinese demand as more important factors than yields. State Street's Aakash Doshi also noted that rising yields could push gold lower in the near term but kept his longer-horizon target intact.