Gold Tumbles Below $4,300 as Oil Prices, Rate Hike Bets Weigh
Gold prices continued their decline on Monday, falling below $4,300 as investors reassessed the outlook for Federal Reserve policy. The precious metal lost over 1% to trade at $4,236.33 an ounce, with gold futures dropping 1.2% to $4,270.50.
The pressure on gold came from elevated oil prices and stronger U.S. activity data, which reinforced expectations of further interest rate hikes by the Fed. Cleveland Fed President Beth Hammack noted that long-term Treasury yields are being pushed higher by stronger growth expectations, concerns over government debt, and expectations for additional interest rate increases.
Markets were pricing a 65% probability of another rate hike in October, with some policymakers indicating further increases could be necessary. The yield spread between the 10-year and 2-year Treasury notes narrowed to as low as 17 basis points last week, the smallest gap since early 2025.
Gold has traded in a narrow range this month, but exchange-traded fund demand remains firm, with gold ETF holdings rising by about 50 tonnes so far. The macro backdrop remains challenging for gold, with higher yields and a strong dollar weighing on prices.