Rise in US Bond Yields Increases Pressure on the Gold Market
While rising US bond yields and expectations that the Fed may implement additional rate hikes put pressure on gold prices, global debt concerns keep safe-haven demand alive in the long term.
The gold market remains under pressure due to rising US bond yields and expectations that the Fed may continue rate hikes, while global debt anxieties and safe-haven demand continue to provide support for gold in the long run.
Rise in Bond Yields
Under normal conditions, rising bond yields reduce the appeal of gold, which does not offer interest earnings. The strengthening of inflation pressures in the US and expectations that the Fed may continue rate hikes are amplifying the obstacles ahead for the dollar and gold.
Spot gold closed last week around $4,285, with weekly losses exceeding 1%. This decline was triggered by the increase in US bond yields.
Impact of Yields and the Dollar
The US 10-year Treasury yield climbing above 5.1% and the 10-year real yield reaching approximately 2.78% have fueled the pressure on gold. In the process that began at the end of February, two- and five-year bond yields have experienced an increase of about 150 basis points. The strengthening of the dollar also makes gold more expensive for investors outside the US.
Fed Expectations and Revisions
According to CME FedWatch data, investors view the probability of rate hikes in October and December as high. This expectation narrows gold's upward movement space in the short term.
Goldman Sachs, holding the view that Fed rate hikes may slow rather than completely halt the rise, lowered its end-2026 gold forecast from $4,900 to $4,650, while maintaining its forecast of $5,400 for the end of 2027.
Global Debts and Safe Haven
On the other hand, every new tension in the bond market does not solely signify a threat for gold. The unsustainable public finances of the US, alongside the weakening fiscal balances of the UK, France, and Japan, are raising question marks regarding the safe-haven nature of government bonds.
According to economist Desmond Lachman, the deterioration in the fiscal structures of these countries limits the safe-haven capacity of bonds and directs investors toward gold.
ETF Holdings and Chinese Demand
According to World Gold Council data, global gold ETF holdings increased by 121 thousand tons in August, reaching a record level of 4,189 tons. China's gold imports exceeding 1,000 tons in the first eight months of 2026 also continue to be one of the mainstays of this demand.