Gold Falls to Two-Month Low as Dollar and Rate Bets Rise
Gold fell 1.2% to $4,113.89 an ounce by 2:12 p.m. EDT on Oct. 7, its lowest since Aug. 5. Gold futures have now fallen in three of the past four sessions while the U.S. dollar has gained.
The slide carried on from Oct. 6. Gold fell 0.5% that day to $4,120.16 an ounce. The U.S. Dollar Index, which measures the dollar against major currencies, rose 0.1% to 102.27, according to Yahoo Finance. That report linked the fall to a stronger dollar and rising Treasury yields, the interest paid on U.S. government bonds.
Traders put the chance of a Federal Reserve rate hike in October at 22%, 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, attention had turned to the Fed's meeting minutes for clues about future rates, according to Reuters.
That drop came after a short lift. Spot gold rose 0.2% to $4,165.29 an ounce by 2:08 p.m. EDT on Oct. 1, and U.S. gold futures for December delivery settled 0.4% higher. Gold stayed above $4,000 an ounce even as Treasury yields jumped, according to Reuters. Prices had also slipped in early Asian trading in early September when the dollar was strong.
ANZ gave a longer-term view. It expects gold to rise to $4,800 in 2026, according to ANZ. It said precious metals remain resilient, with gold and silver supported by strong demand from investors. On rates, ANZ expects cuts in 2026 only in the U.S., Australia and Indonesia.
That $4,800 target is well above its February 2025 call for gold to peak at $3,050 an ounce in June and then hold around $2,900 in the second half of 2025. In older undated commentary, ANZ reported gold gained 0.9% to $1,677 an ounce on a weaker dollar, and noted a move above the 20-day moving average, a simple trend line based on recent prices, may have prompted buying by chart-followers.
The broader context here is about trade-offs for savers and investors. Gold pays no interest. When bond yields rise, the opportunity cost of holding gold goes up because bonds pay more by comparison. Think of it like a savings account that starts to pay more versus a safe that pays nothing. A stronger dollar also makes dollar-priced gold more expensive for buyers using other currencies, which can cool demand.
Looking at what this means for near-term risk, pricing looks sensitive rather than settled. A 22% chance is far from the market's main bet. Yet it was enough to send spot gold to a two-month low and keep futures on the defensive. That tells you how much weight traders now put on Fed words. Meeting minutes, updated rate forecasts and inflation data can move short-term rates fast. Gold will likely react based on whether inflation-adjusted yields rise or investors simply demand extra return for holding longer bonds. Trend-followers are also watching those moving averages, and their automatic buying or selling can sharpen a move in either direction.
