Gold has dropped to a two-week low as traders reprice the odds of a Federal Reserve rate hike this month sharply higher. The metal confirmed a bear market in the same week it posted its best month since January, and the next move now hinges on incoming jobs and inflation data ahead of the September 16 Fed decision.
Spot gold cut through support on Tuesday and printed a fresh two-week low at $4,375, trading $4,378 into the European afternoon after December futures opened 0.4% higher and then reversed. The move extends a 7% decline from last week's peak near $4,700 in four sessions, and it traces to a single cause: a fast repricing of Fed rate-hike odds.
CME FedWatch data now puts the odds of a 25-basis-point hike at the September 15-16 FOMC meeting at 66.4%, up from 39.6% a week earlier. Fed funds futures imply 67% odds of a move on September 16 and 60 basis points of tightening over the next twelve months, against a current target range of 3.50% to 3.75%. Silver is taking it harder: XAG/USD trades $64.76, down 2.69% from Monday's $66.55, and is down 8.90% year to date.
A bear market confirmed inside gold's best month since January
Gold closed August up 9.6%, its best month since January — while also confirming a bear market in the same stretch. Monday's settlement at $4,449.24 marked the second consecutive close below $4,481.78, the level sitting 20% under the record high of $5,602.23 set on January 29, 2026. Year to date, gold is up 0.97%. Over twelve months, it is up 27.16%.
The speech that reversed the trade
The reversal traces to the Fed chairman's Jackson Hole address on Friday, August 28, his first major speech since taking the chair in May. He put PCE inflation at 3.7% over the past year and 4.1% annualized over the past six months, and said financial conditions are not currently restrictive. He did not call for a hike explicitly, but odds still moved from 31% at the start of the month to 66.4% today.
Real yields at multi-decade highs deepen the pressure
The rate story is global. The US 10-year Treasury reached 4.786%, its highest level since January 2025. Germany's 10-year Bund pushed to 3.3546%, a level last seen in 2011. Gold carries no yield, so a global repricing of the risk-free rate raises its carrying cost everywhere at once. If Friday's payroll report comes in at or below the 55,000 consensus, hike odds compress and gold has room to retrace toward $4,450. A beat pushes the metal toward a test of $4,330.
Source: Commodities Analysis & Opinion
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