Gold slumped to its lowest level since early August on Tuesday as elevated U.S. Treasury yields kept pressure on the metal. A Treasury Department warning to global banks over Iran-related dealings added to the cautious tone, while the market now watches whether gold holds the $4,100 level.
Spot gold prices slumped to $4,104 early in Tuesday's European session, marking their lowest level since August 5, 2026. December gold futures also fell to $4,133 at the same time.
Yields keep pressure on gold
Rising bond yields continue to weigh on gold prices. U.S. Treasury yields remain elevated near multi-decade highs, with the 10-year yield holding around 5.31%.
The 10-year term premium is currently estimated at roughly 0.9% to 1.5%, depending on the model. According to the Federal Reserve Board's Kim-Wright model, the term premium stood at around 1.02% as of September 25, 2026, up from approximately 0.96% earlier in September. The term premium is the compensation bond investors require for interest-rate risk, inflation uncertainty, duration risk, and supply-and-demand factors such as increased Treasury issuance and reduced central-bank demand.
An increase in the term premium, combined with higher expectations for a December rate hike, could push the 10-year yield higher, putting further pressure on gold.
Iran sanctions warning adds to the mix
The U.S. Treasury Department's Office of Foreign Assets Control has formally warned banks worldwide that they could face sanctions without prior warning over dealings with Iran. The Treasury also targeted Iran's crypto and shadow-banking channels.
Escalating tensions between the U.S. and Iran could push oil prices higher, increasing inflation concerns and reinforcing expectations for higher short-term interest rates, which could put further pressure on gold.
Key levels to watch
In the short-term technical outlook, gold remains vulnerable to a break below $4,100. A decisive break below this psychological level could trigger further bearish pressure, potentially dragging gold toward $4,080 and $4,060, levels not seen since early August.
Source: Commodities Analysis & Opinion
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