- Gold fell more than 3% on Monday as the US 10-year Treasury yield climbed to 5.27%, a level last seen in June 2007.
- Markets now see a Federal Reserve rate hike by December as close to certain, with inflation worries showing no sign of easing.
- Conflicting reports on US-Iran talks and a heavy week of US jobs data are keeping markets on edge.
Gold opened the week under heavy pressure, sliding more than 3.4% on Monday as a surge in US government bond yields pulled investors away from the metal. After touching $4,280 earlier in the session, XAU/USD dropped to around $4,139.
Yields and rate-hike bets drive the sell-off
The main driver was the bond market. The yield on the US 10-year Treasury note rose to 5.27%, its highest point since June 2007, before easing slightly to 5.23%. Because gold pays no interest, higher yields on government bonds tend to make it less attractive in the short term, and Monday’s move triggered a sharp wave of selling.
Adding to the pressure, Federal Reserve officials have become increasingly vocal about stubborn inflation. Fed Governor Lisa Cook has taken a notably hawkish tone, pointing to ongoing price pressures linked to artificial intelligence investment and conflict in the Middle East. Money markets are now pricing a 65% chance of a quarter-point rate hike at the Fed’s October meeting, while a December hike is seen as almost certain at 94%, according to Prime Terminal.
Oil and Iran headlines add to the uncertainty
Energy markets remained a source of inflation concern. West Texas Intermediate crude opened the week nearly 3% higher before settling back to around $93 a barrel, still up 0.6% on the day.
Geopolitical headlines swung sharply. Al Hadath reported that Iran had agreed to halt its uranium enrichment programme, but Iran’s Press TV denied the claim, saying Tehran’s position was unchanged. Over the weekend, US President Donald Trump rejected a proposed agreement with Iran aimed at reopening the Strait of Hormuz, leaving markets uncertain about the path ahead.
A busy week for data
Traders will be watching a run of key US releases this week, including the JOLTS job openings survey, September’s ADP employment report, the Core PCE price index, and Friday’s Nonfarm Payrolls. Any surprise in the jobs or inflation numbers could move yields, and gold, sharply in either direction.
Technical picture
On the charts, gold has broken below the lower boundary of a bullish wedge pattern, pointing lower in the near term. The Relative Strength Index has dropped steeply and is approaching oversold territory, which signals strong selling momentum but also suggests the move may be stretched.
Key support levels sit at $4,100 and $4,050, followed by the August 3 low of $4,019 and the psychological $4,000 mark. On the upside, gold would need to recover $4,200 before targeting the 100-day and 50-day moving averages at $4,298 and $4,319.
The FirstGold view: why dips like this matter for physical buyers
Short-term sell-offs driven by yields and rate expectations can be sharp, but they rarely change the reasons people hold physical gold and silver over the long term: protection against inflation, currency weakness and geopolitical shocks. All three of those concerns are front and centre in today’s headlines.
It is worth watching what the world’s biggest institutional buyers do when prices soften. According to the World Gold Council, central bank net gold demand picked up significantly in Q2 2026, reaching 289 tonnes, a fivefold increase on the first quarter’s revised estimate of 57 tonnes and a record high for a second quarter. Notably, the Council said the wider geopolitical backdrop, as well as softer gold prices, are likely to have provided some support for the increased buying. Poland added the most, while China increased the pace of accumulation. Central Banks – Gold Demand Trends: Q2 2026 +2
That appetite looks set to continue. In the Council’s annual survey of reserve managers, 45 percent said they still intend to raise their gold holdings over the next twelve months. Official buying does move in fits and starts: first-half central bank demand of 345 tonnes was the lowest for a first half since 2022, and the Council expects the sector to remain set for another strong year of net purchases, underpinned by diversification and risk-hedging, though annual demand will likely fall short of 2025’s record. But the pattern is clear. Central banks and wealthy families treat gold as a long-term store of value, and they tend to add to their holdings during periods of weakness rather than chase rallies. Central Bank Gold Buying 2026: Debt, Reserves, and the Next Rally +2
For individual investors, one of the most practical ways to follow that approach is cost averaging: buying physical gold and silver in regular amounts rather than trying to time the exact bottom. A pullback like this week’s means each purchase buys more metal than it would have a few days ago, while spreading purchases over time helps smooth out the swings that can follow.
No one can predict exactly where the price will turn, and further volatility is likely with major jobs and inflation data still to come. But for those building a long-term position in physical metal, moments when prices pull back sharply are exactly when a disciplined buying plan does its work.
Disclaimer: This article is for general information only and does not constitute financial advice. Prices can fall as well as rise. Consider your own circumstances or speak to a licensed adviser before investing.
