Gold Retreats to Two-Month Low as Dollar and Yields Reassert Pressure
Spot gold fell 1.2% to $4,113.89 per ounce by 2:12 p.m. EDT (1812 GMT) on Oct. 7, touching its lowest level since Aug. 5. Gold futures posted a third decline in four sessions amid gains in the U.S. dollar.
The move extended weakness from Oct. 6. Gold eased that Tuesday, pressured by a firmer U.S. dollar and rising Treasury yields. It fell 0.5% to $4,120.16 an ounce as a stronger dollar weighed, while the U.S. Dollar Index rose 0.1% to 102.27, according to Yahoo Finance.
Rate-path repricing is central to the price action. Traders expected a 22% chance of a Fed rate hike in October, according to Reuters. The Wall Street Journal titled its Sept. 28 note 'Gold Falls to Seven-Week Low as Rate-Hike Bets Rise'. By Oct. 7, focus had shifted to Fed minutes for clues on the rate path, according to Reuters.
The pullback followed a brief reprieve. Spot gold edged 0.2% higher to $4,165.29 per ounce by 2:08 p.m. EDT on Oct. 1, and U.S. gold futures for December delivery settled 0.4% higher. Gold held above $4,000 an ounce despite soaring Treasury yields, according to Reuters. Gold prices had also slipped in early Asian trade in early September amid strength in the U.S. dollar.
ANZ's latest published view looks through the volatility. It expects gold prices to rise to $4,800 in 2026, according to ANZ. It stated that precious metals remain resilient, with gold and silver supported by strong investment demand. On policy, ANZ expects 2026 rate cuts in only the U.S., Australia and Indonesia.
That 2026 target is well above its February 2025 call for prices to peak at $3,050 per ounce in June and then plateau around $2,900 per ounce in H2 2025. In older undated commentary, ANZ reported gold gained 0.9% to $1,677 per ounce, buoyed by a weaker U.S. dollar, and noted a break above the 20-day moving average may have prompted technical buying.
The broader context here is the tension between carry and positioning. Higher nominal yields raise the opportunity cost of a non-yielding asset, and dollar strength mechanically pressures dollar-denominated spot. That explains the day-to-day correlation. It does not explain the level. Holding above $4,000 through a surge in yields points to an offsetting investment bid absorbing duration-related selling.
Looking at what this means for near-term risk, the pricing looks sensitive rather than settled. A 22% implied probability of an October hike is far from a base case, yet it was sufficient to push spot to a two-month low and keep futures on the defensive. That sensitivity puts weight on Fed communications. Minutes, dot revisions and inflation prints can shift the front end quickly, and gold's response will turn on whether real yields or term premium do the work. Trend followers will also watch the moving-average structure after consecutive down sessions, with systematic flows capable of amplifying a break in either direction.
