TLDR
- Spot gold fell 0.5% to $4,120.16 an ounce on Tuesday as the dollar strengthened
- French political turmoil pushed the euro to a 17-month low and boosted dollar demand
- U.S. Treasury yields hit multi-decade highs, raising the cost of holding gold
- Interest rate swaps now show about a 23% chance of an October Fed hike, down from near 70% a week earlier
- Fed meeting minutes from September are due Wednesday and could guide the next policy move
Gold prices slipped on Tuesday as a stronger U.S. dollar and higher Treasury yields outweighed easing expectations for another Federal Reserve rate hike. Spot gold fell 0.5% to $4,120.16 an ounce. Gold futures dropped 0.2% to $4,146.80.
Silver also declined, falling 1.2% to $60.35 an ounce. Platinum dropped 1.3% to $1,703.71, while palladium fell 1.4% to $1,161.00.
Dollar Strength Weighs on Bullion
The U.S. Dollar Index rose 0.1% to 102.27 on Tuesday. The dollar had climbed near its highest level of the year on Monday.
Political uncertainty in France played a role in the dollar’s rise. A selloff in French government bonds pushed the euro to a 17-month low.
Bank of France Governor Emmanuel Moulin warned that France could face more constraints from high interest costs if it fails to fix its public finances. French bond yields kept climbing as a result.
A stronger dollar makes gold more expensive for buyers using other currencies. This typically creates downward pressure on bullion prices.
Treasury Yields Add Pressure
U.S. Treasuries came under fresh pressure on Monday. Longer-dated yields reached new multi-decade highs as the bond market extended its decline.
🚨ALERT: The US bond market is flashing a WARNING markets can't ignore.
The 20-year Treasury yield just hit 5.735%, while the 30-year climbed to nearly 5.7%, both at their highest levels in roughly 24 years.
The 10-year also touched 5.34%, another 24-year high.
Long-term… pic.twitter.com/Rse09TfCJ0
— Coin Bureau (@coinbureau) October 5, 2026
Higher yields increase the opportunity cost of holding gold. Gold does not pay interest, so investors often shift toward bonds when yields rise.
A report from the Institute for Supply Management showed cost pressures in the U.S. services sector grew at their fastest pace in more than four years last month. This added to inflation concerns already weighing on markets.
Despite those price pressures, the labor market has shown signs of weakening. Fed officials have been pushing back against expectations of an imminent rate hike.
Interest rate swaps showed about a 23% probability of an October Fed hike as of Tuesday. That is down sharply from around 70% a week earlier, following a weaker than expected U.S. payrolls report.
Markets are still pricing in a full quarter point rate increase by the Fed’s December meeting.
Minutes from the Fed’s September meeting are due Wednesday. That meeting marked the first rate hike in three years. Investors are looking to the minutes for clues on the central bank’s next steps.
Gold fell more than 6% in September. Energy-driven inflation concerns, expectations of higher U.S. rates, and the stronger dollar all contributed to the drop.
The metal is down more than a fifth since the US-Iran conflict began in late February.
Analysts at ANZ said gold has recovered some ground from last week’s sharp decline. They pointed to investors reassessing rising fiscal pressures around the world.
They also noted that lower expectations for a Fed rate hike have provided some support. That followed the weaker payrolls data released last week.
Spot gold was last seen trading at $4,139.06 an ounce during Asian trading hours. Silver held steady near $61.05 an ounce.
Platinum edged lower while palladium rose slightly. The Bloomberg Dollar Spot Index held steady after climbing for four straight weeks.
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