Yield Surge Sends Gold Plunging to 6-Week Low

Gold prices plummeted by 3.3% to $4,146 on Monday, hitting its lowest level since August 5. The decline was driven by a surge in Treasury yields, with the 10-year yield reaching 5.22%, its highest level since 2007.

The rise in yields has made gold less attractive as an investment, particularly for rate-sensitive investors who can earn a guaranteed return on their bonds. With real yields rising faster than inflation expectations, gold's appeal as a long-duration store of value is being eroded.

Central banks purchased a record 289 tonnes of gold in the second quarter, but that structural bid may not be enough to hold $4,100 while Wednesday's PCE report and Friday's payrolls decide the October Fed path. The market now assigns a 70.3% probability to a 25-basis-point hike in October.