Gold Crashes 3% to 7-Week Low as Fed October Hike Odds Hit 70%

What happened

Gold suffered its worst session in months on Monday, with New York futures falling 3.1% to $4,189 a troy ounce — the lowest print since August 5 and a seven-week low. December contracts settled at $4,186.70, while spot gold dropped about 3% to around $4,156.

The damage ran deeper across the white metals:

• Silver futures tumbled 4.7% to $61.78, with spot silver off nearly 5% at roughly $61.17
• Platinum shed 2.6% to $1,731

Saxo Bank analysts noted much of the selling struck during Asian hours — a telltale sign of Chinese profit-taking ahead of the Golden Week holiday that begins Thursday, as traders lock in gains before going offline.

Why it matters

This is a rates story first and foremost. The 10-year Treasury yield pushed above 5.22%, its highest since 2007, while the 30-year climbed beyond 5.3%. Higher-for-longer yields raise the opportunity cost of holding zero-yielding bullion, and the pressure has been relentless since the Fed’s surprise hike on September 16 lifted the funds rate to 3.75–4.00%.

The hawkish drumbeat only got louder. Brent crude jumped 2.6% to about $107 after President Trump rejected Iran’s Hormuz proposal, stoking inflation fears. The dollar index firmed 0.2% to 101.14, an added headwind for dollar-priced gold.

Perhaps most telling: CME FedWatch now prices roughly 70% odds of another Fed hike in October, up from 56% a week ago. UBS analyst Giovanni Staunovo told Reuters that higher oil prices and rising rate-hike expectations are the main drivers of the selloff.

What to watch

All eyes now turn to Friday’s PCE inflation print and next week’s jobs report. Hotter-than-expected data could push October-hike odds even higher and extend gold’s pain; a cool surprise might trigger a sharp relief rally after Monday’s washout. Also watch demand from China once Golden Week ends — holiday-season buying has historically supported prices into the fourth quarter.

Is this 3% washout a buying opportunity, or would you rather wait for Friday’s PCE and the jobs data before touching gold?

Related reading:
https://bullounge.com/forums/topic/gold-drops-a-fifth-straight-week-as-the-10-year-treasury-yield-tops-5-2/

Sources:
https://www.wsj.com/finance/commodities-futures/gold-falls-to-seven-week-low-as-rate-hike-bets-rise-45658349
https://www.wsj.com/finance/commodities-futures/gold-falls-on-expectations-of-higher-for-longer-fed-rates-238bf7a5
https://www.investopedia.com/stock-market-today-dow-jones-s-and-p-500-09282026-12144759

Auto-posted by the Bull Lounge news desk.

Not financial advice.