Key facts
- Gold prices have fallen about 5% since early September.
- Gold traded around $4,150-$4,200 an ounce on Monday.
- December gold futures slipped to approximately $4,189.
- Global physically backed gold ETFs saw record inflows of $31 billion in the third quarter.
- Central banks bought 289 tonnes of gold in Q2 2026, up 62% year-on-year.
Gold prices are facing headwinds from a strengthening U.S. dollar, rising Treasury yields, and anticipation of further Federal Reserve monetary tightening, pushing the precious metal down from its September highs above $4,400 an ounce. On Monday, gold traded around $4,150–$4,200, with December futures dipping to approximately $4,189 as investors awaited U.S. inflation data.
The precious metal has declined about 5% since early September, a move exacerbated by a dollar index near 18-month peaks and 10-year Treasury yields surpassing 5%. This environment is challenging for gold, as higher interest rates make non-yielding assets like gold less attractive compared to government bonds, and a stronger dollar increases its cost for international buyers.
However, some analysts suggest that the forces driving yields higher could eventually support gold. The Federal Reserve is navigating a difficult path between curbing inflation and slowing economic growth, with rising energy costs complicating the inflation outlook. While a hotter-than-expected U.S. Consumer Price Index report could reinforce expectations for a December rate hike, potentially pushing yields and the dollar higher, UBS Global Wealth Management believes much of the market's hawkish sentiment may already be priced into gold.
Central banks and gold-backed exchange-traded funds (ETFs) continue to be significant sources of demand. In September, global physically backed gold ETFs attracted about $10 billion, contributing to a record $31 billion in inflows for the third quarter. Notably, ETF holdings increased by 67 tonnes in September to a record 4,256 tonnes, even as prices declined. Central banks also increased their gold purchases, acquiring approximately 289 tonnes in the second quarter of 2026, a 62% rise from the previous year, as they diversify reserves away from traditional currencies.