Gold Plunges 3.5% to Seven-Week Low as Trump Rejects Iran Deal and Yields Spike

Key points

• Gold futures fell 3.5% to $4,170.17, while spot gold dropped 3.3% to $4,146.51, marking a seven-week low.
• Silver futures declined 5.1% to $61.52, and spot silver fell 4.92% to $61.11.
• U.S. 10-year Treasury yields reached their highest level since 2007, and 30-year yields hit a peak since 2004.
• Money markets now assign a 66% probability to a Federal Reserve rate hike at the October meeting, up from 9.4% a month ago.
• Major mining stocks, including Sibanye Stillwater and Harmony Gold, fell between 7% and 8% in premarket trading.

Background

Gold had previously tested key technical support levels around $4,370 in early September after a strong August rally. Recent volatility has been driven by Middle East tensions and shifting monetary policy expectations, with the Fed having raised rates to 3.75%–4.00% on September 16, 2026.

How outlets are covering it

Investing.com emphasizes the direct link between Trump’s rejection of Iran’s peace proposal and the immediate spike in oil prices, which rekindled inflation fears. CNBC highlights the broader sell-off in precious metals and mining stocks, noting that global central banks’ record gold purchases in Q2 may offer long-term support despite short-term rate pressure. Al Jazeera focuses on the impact on everyday investors, noting that higher interest rates make gold less attractive compared to yield-bearing assets, while also citing warnings from Cleveland Fed President Beth Hammack regarding elevated inflation risks.

Why it matters

The sharp decline in gold signals a shift in market sentiment toward tighter monetary policy and higher real yields. With the Fed potentially raising rates again in October, investors are moving away from non-interest-bearing assets like gold and silver, favoring bonds and cash. This trend could continue if inflation remains elevated due to rising energy costs, potentially affecting broader risk assets and global economic stability.

What to watch

Investors will closely watch the Federal Reserve’s October meeting for signals on future rate hikes. Any further escalation in the U.S.-Iran conflict or additional spikes in oil prices could exacerbate inflation concerns, potentially leading to more aggressive monetary tightening. Conversely, a resolution to the Middle East conflict or a slowdown in inflation could provide relief for gold and other risk assets.