Gold fell 3.9% as the 10-year yield touched a one-year high
Gold fell 3.9% on Monday, September 28, as the 10-year Treasury yield touched 5.274%, its high of the past year.
Key takeaways
Gold fell 3.9% on Monday, September 28, as the 10-year Treasury yield touched a one-year high.
A weekend rejection of a deal to reopen the Strait of Hormuz, the narrow sea lane for Gulf oil, sent oil higher. The oil jump faded. Gold's drop did not.
President Donald Trump rejected the Iranian proposal on Saturday. Monday was the first session that could price it.
"They made a proposal but I reject it," he told reporters at the White House.
West Texas Intermediate crude traded as high as $96.53 a barrel, 4.5% above Friday's settle. The jump did not hold. USO, a fund that holds near-term oil futures, closed up 1.2%.
Energy stocks barely moved once that jump faded. XLE, a fund that holds energy stocks, rose 0.1%.
SPY, a fund that holds the S&P 500, fell 0.8%. The drop was sharper in QQQ, a fund that holds the Nasdaq-100, which fell 1.1%, and more than half of that came from Meta, Advanced Micro Devices, Intel and Micron. Meta fell 4.8%.
What did not fade
The 10-year yield closed at 5.24%, up 0.06 percentage point. In trading it reached 5.274%, its highest level of the past year.
TLT, a fund that holds US Treasurys maturing in more than 20 years, fell 0.9%, its fifth straight daily loss. The shares traded as low as $78.27, their lowest price in a year, and closed at $78.62.
Governor Lisa Cook spoke in Oakland, California, at 1:25 p.m. ET. She said she voted with the rest of the Fed's policy committee for a quarter-point increase at the September meeting. The Fed's main rate now sits in a range of 3.75% to 4.00%.
In her estimate, total inflation rose 3.8% in the year through August. Core inflation, which leaves out food and energy, rose 3.4%.
"In coming months I expect to see continued pressure on inflation from the AI buildout ... and from the pass-through of higher oil prices and supply chain disruptions associated with the conflict in the Middle East," she said.
She does not expect productivity gains from AI to arrive in time to offset that pressure later this year. She said she will consider what policy rate may be needed to guide inflation down to the Fed's target.
GLD, a fund that holds physical gold, fell 3.9%. Gold futures traded as low as $4,143.10.
The selling was wider than gold. Silver futures were down 5.7% in late trading.
Metals sold off together. Oil did not.
The day's rise in the 10-year, 0.06 percentage point, is a thin explanation for a drop of this size. The oil jump did not last, and the dollar index was little changed.
Our read is that gold was up against the yield itself, at its highest level of the past year. Gold pays no interest, and that yield did not fade.
Gold and long Treasurys fell. Oil rose.
- GLD · 377.92
- TLT · 78.62
- USO · 149.99
Frequently asked
How high did the 10-year yield go?
It reached 5.274% in trading, its highest level of the past year, and closed at 5.24%.
Did the oil jump last?
West Texas Intermediate traded as high as $96.53, but the jump did not hold and USO closed up 1.2%.
What happened to long Treasurys?
TLT fell 0.9%, its fifth straight daily loss, and traded as low as $78.27, its lowest price in a year.
What did Lisa Cook say about inflation?
She said total inflation rose 3.8% through August and she expects continued pressure from the AI buildout, higher oil prices, and Middle East supply disruptions.
