Metals Slide as Treasury Yields Outpace Cooling Inflation

Gold traded near $4,156.10 an ounce, shedding 0.60%, while silver fell 1.90% to $60.180. The cooling inflation figures—August PCE rose 0.3% monthly and 3.4% annually—helped push the probability of an October Fed hike down to roughly 37.1% from 70.9% just a week ago. Despite this shift, the 10-year Treasury yield climbed toward 5.29%, creating a persistent headwind for non-yielding assets. Market focus now shifts to Friday’s September employment report, which serves as the next critical gauge for the Fed’s potential policy path.

Global equities faced similar pressure, with the S&P 500 falling 0.3% and the Stoxx Europe 600 dropping 0.5%. Beyond domestic data, geopolitical friction in the Strait of Hormuz continues to complicate the inflation outlook. Reports of a projectile striking a tanker in the region have kept energy prices elevated, with Brent crude settling near $103.50. This "Hormuz premium" keeps energy-driven inflation risks embedded in the market, creating a tug-of-war between the bullion-supportive dip in rate hike odds and the dollar-strengthening impact of global geopolitical instability.