Gold drops below $4,300 as Fed hike bets strengthen dollar

Metric	Level
10-year Treasury yield	4.80%, highest since early 2025
5-year Treasury yield	4.55%, highest since October 2025

Bullion slid to its weakest level in four weeks, trading under $4,300 an ounce, as a firmer dollar and rising Treasury yields tightened the squeeze on the non-yielding metal.

The 10-year Treasury yield reached 4.80%, the highest since early 2025, while the 5-year note touched 4.55%, its strongest since October 2025, according to AP data. Higher yields raise the opportunity cost of holding gold and support the dollar, which moves inversely to the metal.

Fed Chair Kevin Warsh said the central bank may still lift its short-term rate in coming months if inflation stays elevated, and traders are weighing the possibility of a 50-basis-point hike at the next FOMC meeting. Gold steadied near $4,400 last week before the slide deepened, with ETF outflows reflecting a shift toward yield-bearing assets.

Immediate support sits at $4,350-$4,300, with resistance at $4,450-$4,500, where the 50-day moving average resides. The next test is the US CPI report and Fed commentary, which could reinforce or ease rate-hike bets.

Iran Tensions Add Two-Sided Risk

The escalation between the US and Iran injects a two-sided dynamic into precious metals. Safe-haven buying could lift gold if the conflict deepens, but the firmer dollar and higher yields remain the dominant pressure for now. Silver, the closest peer metal, also fell to near $66 an ounce on the same dollar strength, showing the breadth of the pullback across the complex.

Global Bond Sell-Off Broadens

The slide is part of a wider repricing across government debt. Euro-zone inflation jumped to 3.3% in August, the highest in three years, pushing German 10-year yields to 3.35%, the strongest in more than 15 years. UK 10-year bonds pay 5.14%, near levels last seen during the 2008-09 financial crisis. In the US, the Congressional Budget Office projects the budget deficit will top $2 trillion this year, about 6% of the economy, with total federal debt at $40 trillion.

The combination of sticky inflation, heavy government borrowing and large tech firms issuing debt to fund AI data centers keeps upward pressure on yields, a backdrop that historically weighs on gold. A hotter-than-expected CPI print would likely reinforce rate-hike bets and push bullion toward the lower end of its support band, while any sign of easing price pressures could trigger a rebound toward $4,500.

This article is for informational purposes only and does not constitute investment advice.