Highlights

• Gold traded around US$4,270 an ounce and was set to finish the week more than 2% lower.
• High energy costs, driven by the US–Iran standoff over the Strait of Hormuz, are adding to expectations of further US Federal Reserve rate rises.
• The 30-year US Treasury yield rose to just under 5.5%, its highest level in more than two decades.

Gold was on track for a weaker week, according to reports on 25 September 2026. Persistent inflation worries continue to shape expectations for US interest rates. With energy prices still high and no breakthrough in talks over a key Middle East shipping route, investors are weighing whether the Federal Reserve will need to keep raising rates.

Gold Slips as Rate Expectations Build

Gold was trading near US$4,270 an ounce, down more than 2% since the previous Friday. The main pressure has come from the view that the Fed may need to raise rates again to contain inflation, after lifting rates last week for the first time in three years.

Higher rates tend to weigh on gold because it pays no interest. When bonds and cash offer better returns, holding gold becomes less attractive. In recent weeks, gold's direction has closely tracked how markets expect energy costs to affect the Fed's next moves.

Oil Steadies as Hormuz Talks Stall

Oil prices steadied after a sharp jump on Thursday. The US and Iran remain without an agreement on restoring energy shipments through the Strait of Hormuz, a major global oil transit route. Reports indicate that negotiators are exploring a phased deal that could see Iran reopen the waterway in exchange for the US easing its blockade of Iranian ports. Until a deal is reached, energy markets are likely to stay sensitive to any news from the talks, and inflation concerns will remain high.

Bond Sell-Off Deepens

US Treasuries fell further on Thursday as the oil spike added to inflation fears. Concerns about the level of US government debt also weighed on bonds. The 30-year Treasury yield rose to just under 5.5%, its highest in more than 20 years.

Wall Street is starting to consider that yields may stay high for longer. Higher interest rates can raise borrowing costs throughout the economy and make non-income-generating assets such as gold relatively less attractive.

What It Could Mean for Investors

For Australian investors, moves in gold prices and US yields can affect local gold miners, bond markets and interest-rate-sensitive sectors. Gold priced in Australian dollars also depends on currency movements, so local returns may differ from the US dollar price.

Outlook

In the near term, gold's direction is likely to depend on three things: progress in the US–Iran negotiations, the path of oil prices, and signals from the Fed on further rate rises. A deal that reopens the Strait of Hormuz could ease energy prices and inflation fears, which may reduce pressure on gold. Continued deadlock could keep rate hike expectations and bond yields high.

Conclusion

Gold's weekly decline shows how closely precious metals are now tied to energy markets and interest rate expectations. With the Hormuz talks unresolved and yields at multi-decade highs, investors are likely to stay cautious until there is clearer direction on inflation and Fed policy.

Note- All data presented is based on information available at the time of writing.

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