Key Highlights

  • According to Edward Jones, the metal is down sharply for the month, and Monday made things worse.
  • Futures now price a strong majority chance of another hike at the October 28 meeting.
  • On Monday, the 10-year Treasury Yield hit its highest level since 2007, and the 30-year its highest since 2004.
  • Gold miners were hit hard, with Newmont, Agnico Eagle Mines and Gold Fields among the decliners.

After Monday's heavy drop on September 28, gold is down sharply for the month with just two sessions left, as a hawkish Federal Reserve and soaring bond yields reverse its momentum.

A month that turned sour

Gold is heading into the final days of September on the back foot. According to Edward Jones, the metal is down sharply for the month, and Monday made things worse. December gold futures fell $152.80 to $4,168.40 an ounce, the worst day since June 10. Spot gold slid to $4,148.69, a seven-week low.

September and the third quarter both end on Wednesday, September 30. Unless gold stages a strong rebound in two sessions, it will post a losing month.

The Fed changed the game

The biggest shift in September came from the Federal Reserve. At its September 15-16 meeting, the Fed raised rates for the first time in three years, in a unanimous vote under Chair Kevin Warsh. Warsh said: "Inflation is too high and has been for too long." According to Schwab (NYSE:SCHW), 16 of 19 Fed officials expect at least one more hike in 2026.

Futures now price a strong majority chance of another hike at the October 28 meeting. For gold, which pays no interest, that is a serious headwind. Higher rates increase the appeal of cash and bonds.

Yields at multi-year highs

The Bond Market has amplified that message. On Monday, the 10-year Treasury yield hit its highest level since 2007, and the 30-year its highest since 2004. The two-year yield reached its highest since May 2024. As yields climb, the Opportunity cost of holding gold rises.

The dollar has firmed too. The US Dollar Index rose to 100.94, making dollar-priced gold more expensive for buyers overseas.

Oil and inflation: a twist

Rising oil might normally support gold as an Inflation hedge. But this month, higher oil has fed expectations of a more aggressive Fed, which hurts gold more than inflation helps it.

Fed Governor Lisa Cook added to the hawkish tone, saying: "I expect to see continued pressure on inflation from the AI build-out … and from the pass-through of higher oil prices."

The weakness has spread. Silver fell $3.08 to $61.72 on Monday. Gold miners were hit hard, with Newmont (NYSE:NEM), Agnico Eagle Mines (NYSE:AEM) and Gold Fields (NYSE:GFI) among the decliners. Gold Fields also faced the rejection of its Takeover proposal by Northern Star Resources.

Stocks broadly fell too, with the S&P 500 down 59.72 points to 7,683.69 and the Dow Jones Industrial Average off 347.11 points to 51,481.51.

Even after the slide, gold still trades above $4,000 an ounce. A losing month does not erase that, but it shows how quickly sentiment can turn when the rate outlook shifts. For Indian buyers, local prices also depend on the rupee's moves against the dollar.

Gold's last two sessions of September hinge on data

Gold's last two sessions of September hinge on data. Tuesday brings consumer confidence and JOLTS job openings. Wednesday, the final day of the month and quarter, brings the August PCE inflation report, the Fed's preferred gauge. Schwab's Collin Martin said: "If it comes in a little hot, that suggests more hiking might be necessary." Friday's September jobs report opens October with another big test.