Gold prices fell sharply on Monday as U.S. Treasury yields rose and the dollar strengthened, adding to a broad repricing across global markets at the start of the week.
Spot and futures-linked gold indicators were down more than 3% during the U.S. morning, while the benchmark 10-year Treasury yield moved above 5.2%. The U.S. Dollar Index also traded higher.
Higher yields reduce gold’s appeal
Gold does not pay interest, so rising government bond yields can make the metal less attractive relative to income-producing assets. The move in Treasuries reflected renewed concern about inflation, especially after oil prices turned higher again.
Investors are also preparing for a series of U.S. economic releases this week, including inflation and labor-market data that could influence expectations for Federal Reserve policy.
Oil adds to inflation concerns
Crude oil rose Monday amid renewed uncertainty over U.S.-Iran negotiations and shipping through the Strait of Hormuz. Higher energy costs can feed into headline inflation, transportation expenses and corporate margins.
The combination of stronger oil, higher bond yields and a firmer dollar created a difficult backdrop for precious metals even as geopolitical uncertainty remained elevated.
Markets face a data-heavy week
Traders will watch incoming U.S. inflation, manufacturing and employment figures for evidence on whether price pressures are cooling or becoming more persistent. Any major change in rate expectations could produce another sharp move in Treasury yields, the dollar and gold.
Sources: Charles Schwab market update and U.S. market data.
