Gold slips below $4,140 as US Treasury yields rise
Gold traders in the United Arab Emirates watched spot prices fall to $4,140.06 an ounce on Friday, a decline of 0.9 percent that capped off a difficult week for the precious metal. The drop came despite a weak US employment report that would typically lift demand for safe-haven assets.
The metal had touched an intraday high of $4,227 earlier in the session, briefly crossing the $4,200 threshold before those gains evaporated. US gold futures settled 1 percent lower at $4,162.30. The weakness leaves gold approximately 3.4 percent down for the week.
Why rising yields are overshadowing jobs data
The answer lies in the bond market. The yield on the US 10-year Treasury note moved higher on Friday, resuming its climb after briefly pausing on Thursday. Higher yields increase the opportunity cost of holding non-interest-bearing assets like gold.
For United Arab Emirates-based investors, the mechanics are straightforward: US Treasury yields represent the return on holding US government debt, which is considered virtually risk-free. Gold, by contrast, pays no interest, so as yields rise, the incentive to hold gold diminishes.
The US Labor Department reported that the American economy added only 29,000 jobs in September — roughly a third of the 90,000 positions economists had expected. The unemployment rate ticked up to 4.2 percent from 4.1 percent. Average hourly wages showed their smallest annual gain since May 2021, rising just 3 percent.
Normally, such softening labor market data would encourage gold buying, as traders anticipate the Federal Reserve might ease interest rates to stimulate growth. This time, the bond market responded more to inflation concerns than to weak job figures.
What changed for investors
Federal Reserve officials have signaled that inflation remains their primary concern, dampening expectations for aggressive rate cuts. The market had already priced in some monetary easing, and the weak employment figures failed to provide fresh momentum for a sustained rally.
Adding to the pressure, the US dollar strengthened, making gold more expensive for international buyers. Traders also noted that gold had encountered technical resistance near recent highs, triggering profit-taking.
Context for United Arab Emirates buyers
United Arab Emirates residents tracking gold prices this year have witnessed significant volatility. The metal surged above $5,000 an ounce in January, reaching an intraday peak of $5,595, before retreating more than 20 percent from that record high.
Analysts from major financial institutions remain divided on the near-term direction. HSBC has lowered its 2026 average forecast to $4,490 per ounce, while Goldman Sachs maintains a target of $4,900 per troy ounce. J.P. Morgan Global Research has suggested prices could climb to $6,000 by year-end, though such projections assume Treasury yields will eventually stabilize.
For United Arab Emirates gold retailers and jewellery buyers, Friday's settlement at $4,140.21 per ounce for 24-karat gold represents a decline of $41.50 from the previous day — a noticeable shift for those purchasing by the gram.
The Federal Reserve raised its target rate range in September and is expected to hold steady in October, with markets still pricing in a possibility of another hike by December. Until the inflation picture clears, Treasury yields may continue to set the ceiling for gold.
