Gold falls 2% as rising Treasury yields dampen demand

Gold prices fell around 2% on Tuesday as elevated US Treasury yields increased the opportunity cost of holding non-yielding assets.

Spot gold declined to around $4,357 per ounce as of 1240GMT, its lowest level since Aug. 19, extending losses after dropping below $4,400 earlier in the session.

Silver suffered a steeper decline, falling 2.8% to $64.65 per ounce. Platinum and palladium also traded lower.

The selloff in precious metals came as US Treasury yields climbed to their highest levels since January 2025 amid mounting concerns that rising energy prices and tensions in the Middle East could fuel inflation.

Higher bond yields tend to weigh on gold and silver because the metals do not provide interest income, making yield-bearing assets relatively more attractive.

Expectations of tighter monetary policy were also bolstered by Federal Reserve Chair Kevin Warsh’s remarks at the Jackson Hole symposium last week.

Warsh said the central bank would “have work to do” if policymakers were not confident that inflation was returning sustainably to the Fed’s 2% target.

Money markets are pricing in a 66% probability that the Fed will raise interest rates at its meeting later this month, according to the CME FedWatch Tool.

Investors are now awaiting a series of US labor-market indicators for further clues about the strength of the economy and the central bank’s policy path.

The ADP private employment report is due Wednesday, while the closely watched nonfarm payrolls report will be released Friday.

Stronger-than-expected employment figures could reinforce expectations of a rate increase and place additional pressure on precious metals, while signs of labor-market weakness could reduce tightening bets.