Gold price erases 2026 gains as Fed hike bets climb to 70%, silver slides

AI desk brief

Gold extended its correction for a third straight session, hitting a two-week low as global bond yields surged and traders lifted the odds of a Fed rate hike this month to nearly 70%. December Comex gold fell as much as 2.4% to $4,374.10/oz before trading near $4,398.90, while spot gold slipped 1.7% to $4,362.57. Silver underperformed, dropping as much as 3.2% to $64.83/oz and leaving the gold/silver ratio around 67, down from 70 at end-July.

The move is being driven primarily by rates and the dollar: 10-year Treasury yields were near 4.77% and UK gilt yields jumped to 5.22%, while Brent traded above $92 after fresh Middle East tensions revived oil-flow concerns. Fed governor Michael Barr signaled the central bank should be ready to hike again if inflation stays sticky, reinforcing the hawkish message from Kevin Warsh at Jackson Hole. TD Securities called the selloff a direct follow-through from those comments plus the bond-market rout.

Despite the pullback, bullion is still up just 0.7% in 2026 after a 10% August surge, and it remains about 20% below its January 28 record close of $5,419.83. Gold miners sold off with the metal, but the sector had just logged a historic August: the NYSE Arca Gold Miners Index rose 33%, its best August since at least 1994, and VanEck’s Gold Miners ETF saw its biggest monthly inflows since February.

Near term, the key risk for bulls is further yield backing-up and a firmer dollar, which could pressure gold toward the $4,000 area if Fed-hike expectations keep rising. Offset to that is lingering geopolitical risk and the possibility that the current washout in bullion is nearing exhaustion; however, India’s PM urging consumers to avoid gold purchases adds a fresh demand-side headwind just as imports have already risen more than 32% y/y in the first four months of the fiscal year.