Rate Hike Odds Push Gold Prices to Two-Week Low
Gold prices fell to their lowest level since August 19 as the 10-year Treasury yield reached its highest point since January 2025, increasing the opportunity cost of holding bullion. The CME FedWatch probability of a rate hike rose to 66% after Kevin Warsh's Jackson Hole remarks, pushing gold down by more than 3%. Central banks purchased 288.9 tonnes of gold in Q2 2026, a 62% year-over-year increase, and are projected to buy around 850 tonnes this year.
The Fed's September 16 rate decision will determine whether higher yields continue to pressure gold prices or remove the downward pressure. Labor data, including the ADP employment report and nonfarm payrolls, could shift rate-hike odds before the Fed's decision, making it a key catalyst for gold. Physical demand remains strong, with bar and coin demand reaching a 12-year high in 2025.