European Investor
01 Sep 2026, 09:55
Gold Falls 1.5% as Treasury Yields Surge and Fed Rate-Hike Bets Rise
Gold prices fell sharply on Tuesday as rising U.S. Treasury yields and growing expectations for a Federal Reserve rate hike outweighed safe-haven demand generated by renewed U.S.-Iran tensions.
December gold futures dropped about 1.5% to $4,416.60, extending the pullback that began after Fed Chair Kevin Warsh’s hawkish Jackson Hole speech.
The biggest pressure came from the bond market. The U.S. 10-year Treasury yield climbed to around 4.79%, its highest level since January 2025, as a global government-bond selloff intensified. Higher yields increase the opportunity cost of holding non-yielding assets such as gold.
Warsh’s comments remain another major headwind. After signaling that the Fed may need to tighten policy if inflation does not return toward its 2% target, traders are now pricing roughly a 66% probability of a September rate hike. (Reuters)
Renewed fighting between the U.S. and Iran would normally support gold through safe-haven demand. This time, however, the conflict has also pushed Brent crude above $90 per barrel, raising concerns that another energy shock could keep inflation elevated and force the Fed to maintain tighter monetary policy. That inflation-and-rates effect is currently outweighing gold’s geopolitical support.
Attention now turns to U.S. labor-market data, particularly ADP employment and Friday’s nonfarm payrolls report. Strong employment figures could reinforce expectations for a September Fed hike and keep pressure on gold, while weaker data could provide room for bullion to recover.
Gold prices fell sharply on Tuesday as rising U.S. Treasury yields and growing expectations for a Federal Reserve rate hike outweighed safe-haven demand generated by renewed U.S.-Iran tensions.
December gold futures dropped about 1.5% to $4,416.60, extending the pullback that began after Fed Chair Kevin Warsh’s hawkish Jackson Hole speech.
The biggest pressure came from the bond market. The U.S. 10-year Treasury yield climbed to around 4.79%, its highest level since January 2025, as a global government-bond selloff intensified. Higher yields increase the opportunity cost of holding non-yielding assets such as gold.
Warsh’s comments remain another major headwind. After signaling that the Fed may need to tighten policy if inflation does not return toward its 2% target, traders are now pricing roughly a 66% probability of a September rate hike. (Reuters)
Renewed fighting between the U.S. and Iran would normally support gold through safe-haven demand. This time, however, the conflict has also pushed Brent crude above $90 per barrel, raising concerns that another energy shock could keep inflation elevated and force the Fed to maintain tighter monetary policy. That inflation-and-rates effect is currently outweighing gold’s geopolitical support.
Attention now turns to U.S. labor-market data, particularly ADP employment and Friday’s nonfarm payrolls report. Strong employment figures could reinforce expectations for a September Fed hike and keep pressure on gold, while weaker data could provide room for bullion to recover.
