Gold falls to a seven-week low near $4,160 as the 10-year yield hits 5.22%; silver drops about 4%

Gold slid to its lowest level in seven weeks on Monday, breaking below $4,200 an ounce as rising Treasury yields and bets on another Federal Reserve rate increase pulled money out of metals. Spot gold was near $4,158 at 9:56 a.m. ET and spot silver near $61.79. Kitco put gold down 2.78% and silver down 4.49% on the session in early U.S. trade; CNBC reported gold futures down 3.3% earlier in the morning. The SPDR Gold Shares ETF was off 3.1% and the iShares Silver Trust 4.1%, per Nasdaq.com.

Why a war is not holding gold up

The obvious read is that a stalled U.S.-Iran standoff should be good for gold. On Monday it was not, because the same event is running through oil and into interest rates. President Trump rejected Iran's proposal to reopen the Strait of Hormuz, WTI crude rose about 4% to around $96 a barrel, and that fed straight into inflation worries, Kitco reported. Traders now see about a 68% to 70% chance of another Fed hike in October, according to Kitco, after the Fed raised rates this month for the first time since 2023.

CNBC reported the 10-year Treasury yield up more than 3 basis points at 5.219% and the 2-year up more than 5 basis points at 4.916%. The Treasury's own daily curve had the 10-year at 5.17% at Friday's close, against 4.75% on Aug. 31.

The cost of holding gold, in dollars

Gold pays nothing, so its real competitor is a safe yield. That competitor has become much more expensive to ignore:

Our calculation, before tax and ignoring gold's own storage or fund fees. The step from late August is $470 a year per $100,000, in four weeks. For a jeweler, dealer or small business keeping part of its reserves in metal, that is the number to set against whatever protection gold is meant to provide. For a trader, it is why a hawkish data print this week hits bullion twice: once through the dollar and once through yields.

Silver falling harder than gold fits the same pattern. It trades as both a precious and an industrial metal, so a rate-driven growth scare hits it from two sides. Miners fell as well; Newmont was down 3.7% early Monday, and our Gold Fields and Northern Star story shows what the drop did to a pending takeover bid.

The week that decides it

Kitco lists JOLTS job openings on Tuesday, ADP private payrolls and August PCE inflation on Wednesday, ISM manufacturing on Thursday and September nonfarm payrolls on Friday. Stronger numbers would add to pressure on yields and gold; softer ones would test whether Monday's break below $4,200 went too far. Background: gold's drop below $4,300 last week, the gold chart and the 10-year yield chart.

Sources: Kitco; CNBC on metals and on yields; WSJ; U.S. Treasury; Nasdaq.com. Carrying-cost figures are our calculations. This is market information, not investment advice.