Gold Suffers Rare Decline Amid Rising Bond Yields and Stronger Dollar

Gold experienced an unusual decline on September 28, falling more than 3% and briefly trading near seven-week lows. The metal's drop was largely attributed to rising bond yields, a strengthening dollar, elevated oil prices, and growing expectations for tighter monetary policy.

The Kobeissi Letter analyzed the move, showing that gold fell roughly 3.4% in one day, which is almost three standard deviations below its normal daily return. According to their chart, going back to 2006, gold has recorded an average daily change of +0.05%, with a standard deviation of 1.19%. Monday's decline produced a Z-score of -2.90.

Peter Schiff offered a differing long-term interpretation, arguing that a broader bond bear market could eventually become bullish for precious metals. He noted that rising yields can create difficult choices for the Federal Reserve, which may ultimately weaken the dollar and increase inflation risk, making gold more favorable.