Gold erases annual gains as bond selloff and Fed hike odds climb

Gold prices fell for a third consecutive session on Tuesday, reaching a two-week low as a global bond selloff pushed yields to their highest levels since 2008. Traders simultaneously increased the probability of a Federal Reserve rate increase this month to nearly 70 percent. Comex gold for December delivery dropped as much as 2.4 percent to 4,374.10 dollars an ounce in New York, marking its weakest level since August 19. By late morning, the contract was trading at 4,398.90 dollars, down 1.8 percent on the day. Spot gold was 1.7 percent lower at 4,362.57 dollars. This three-day decline represents bullion’s longest losing streak since early July.

Comex silver for December delivery also faced downward pressure, falling as much as 3.2 percent to 64.83 dollars an ounce before steadying at 65.48 dollars, a decrease of 2.3 percent. The gold-to-silver ratio has shifted, with one ounce of gold now purchasing approximately 67 ounces of silver, compared to 70 at the end of July. The primary driver of this market movement is the bond sector, where ten-year Treasury yields held near 4.77 percent. British equivalent yields jumped 16 basis points to 5.22 percent. Additionally, Brent crude oil traded above 92 dollars after renewed hostilities in the Middle East revived concerns about oil flows through the Strait of Hormuz. Rising yields and a firmer dollar act as headwinds for gold, a metal that generates no income.

Federal Reserve officials have reinforced the hawkish tone. Governor Michael Barr stated on Tuesday that the central bank should be prepared to raise rates if inflation fails to subside, warning that price pressures risk becoming entrenched after more than five years above target. This followed Chairman Kevin Warsh’s speech at Jackson Hole on Friday, in which he noted that the Fed still had work to do regarding inflation. Ryan McKay, senior commodity strategist at TD Securities, described gold’s weakness as a follow-through from Warsh’s remarks and Barr’s comments, noting that the renewed selloff in global bonds added to the pressure.

The recent slide has undone part of a remarkable performance in August, during which gold rose about 10 percent, its best month since January. This rally occurred after the US Treasury moved to hold down long-term borrowing costs and revived the debasement trade. Despite this, bullion is now up just 0.7 percent in 2026 and trades about 20 percent below the record close of 5,419.83 dollars set on January 28. Gold equities also gave ground on Tuesday, with Eldorado Gold down 3.2 percent, Agnico Eagle down 2.8 percent, Equinox Gold down 2.7 percent, Alamos Gold down 2.7 percent and Gold Fields down 2.5 percent.

The previous month was historic for the sector. The NYSE Arca Gold Miners Index climbed 33 percent in August, its best performance since at least 1994 and more than three times bullion’s advance. This gain clawed back part of a 39 percent retreat from its March record. The VanEck Gold Miners ETF drew its heaviest monthly inflows since February. Over the past month, Eldorado is up 44 percent, Equinox 40 percent, Gold Fields 39 percent, AngloGold Ashanti 38 percent, Coeur Mining 38 percent and Hecla Mining 38 percent. Wheaton Precious Metals is ahead 36 percent, Agnico Eagle 34 percent and Newmont 32 percent. Silver producers were carried along by a 20 percent run in the metal earlier in August that has since faded.

Craig Basinger, chief market strategist at Purpose Investments, told Bloomberg that a washout phase has played out and investors are becoming excited about gold again. He added Agnico to the firm’s dividend fund in mid-July. However, others see the pace slowing. Candice Bangsund, a portfolio manager at Fiera Capital, expects the Fed to hold rates in September but sees gold falling as low as 4,000 dollars after moving a little bit too far too fast. Analyst price targets compiled by Bloomberg imply about 7 percent upside for Newmont over the next 12 months and roughly 10 percent for Agnico.

Pressure is also building on the demand side. Indian prime minister Narendra Modi told citizens on Tuesday to avoid buying gold unless necessary, his second such appeal this year, as a widening trade deficit and a weaker rupee strain the economy. Gold is India’s biggest import after oil, and shipments rose more than 32 percent from a year earlier in the first four months of the financial year that began in April. The country’s trade deficit widened to almost 32 billion dollars in July, the most since January. For all the September wobble, silver is still up 59 percent over the past 12 months and gold 25 percent.