Gold Prices Plummet as US Yields Soar to Highest Level Since 2007

Gold prices declined below $4,300 as US Treasury yields climbed to their highest level since 2007. The US 10-year Treasury yield hit 5.041% before coming off its high, remaining above 5%. This surge in yields weighed on gold, making it less attractive due to its non-yielding nature.

The Federal Reserve is expected to raise interest rates at its September meeting, with a 92.4% chance of a 25 basis point hike according to the CME FedWatch tool. Higher interest rates typically hurt gold prices as they make yield-bearing assets more attractive.

Daniel Pavilonis, senior market strategist at StoneX, noted that higher energy prices cause inflation, which can lead to higher interest rates and negatively impact gold. The precious metal remains in a range-bound area, but could sell off further if rates continue to rise.