GOLD DROPS 2% AS RISING TREASURY YIELDS DAMPEN DEMAND

Tue 01 September 2026:

Gold prices dropped by about 2% on Tuesday as rising US Treasury yields made interest-free assets such as gold less attractive to investors.

Spot gold fell to around $4,357 an ounce by 12:40 GMT, its lowest level since August 19. The decline extended earlier losses after the precious metal slipped below the $4,400 mark.

Silver recorded a sharper fall, dropping 2.8% to $64.65 an ounce, while platinum and palladium also moved lower.

The broad selloff in precious metals came as US Treasury yields climbed to their highest levels since January 2025. Investors are increasingly concerned that higher energy prices and escalating tensions in the Middle East could add to inflationary pressures.

Higher bond yields generally put pressure on gold and silver because the metals do not generate interest income. As yields rise, investors may instead favour bonds and other assets that provide returns.

Expectations of tighter US monetary policy were reinforced by comments from Federal Reserve Chair Kevin Warsh at last week’s Jackson Hole symposium. Warsh said the central bank would still have work to do if policymakers lacked confidence that inflation was moving sustainably toward the Fed’s 2% target.

Markets are currently pricing in a 66% chance of a US interest-rate increase later this month, according to the CME FedWatch Tool.

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US Jobs Data in Focus

Investors are now turning their attention to upcoming US employment figures for indications about economic strength and the Federal Reserve’s next policy move.

The ADP private-sector employment report is due on Wednesday, followed by the closely watched nonfarm payrolls report on Friday.

A stronger-than-expected jobs market could increase expectations for higher interest rates, potentially putting further pressure on precious metals. Conversely, weaker employment data could ease rate-hike expectations and provide some support for gold and silver.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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