Gold prices took a step back on Monday as a resurgent U.S. dollar, climbing government bond yields, and volatile energy markets pressured the precious metal. Despite widespread geopolitical angst and domestic instability in Europe, bullion struggled to maintain upward momentum as traders factored in tighter macroeconomic conditions.
Spot gold slipped 0.6% to close at $4,140.52 per ounce, while gold futures shed 0.5%, finishing the trading session at $4,160.30 per ounce.
French Political Chaos Triggers Sovereign Debt Sell-Off
Investor sentiment across Europe deteriorated sharply as violent civil unrest erupted across France over soaring living expenses and deteriorating public services. The escalating tensions have placed intense political strain on President Emmanuel Macron, deepening concerns over the eurozone’s second-largest economy and its ongoing fiscal challenges.
The turmoil prompted an immediate sell-off in French government debt, sending 10-year borrowing costs soaring. The pressure quickly spilled across global debt markets, lifting sovereign yields on both sides of the Atlantic:
- U.S. 10-Year Treasury Yield: Jumped 4.3 basis points to settle at 5.143%.
- U.S. 2-Year Treasury Yield: Rose 4.2 basis points to end the session at 4.778%.
Rising bond yields typically dampen appetite for non-yielding assets like gold, temporarily overshadowing bullion's traditional appeal as a safe-haven asset.
Central Bank Accumulation Keeps the $4,000 Floor Intact
Despite recent headwinds, gold has managed to defend its crucial $4,000 per ounce threshold since August. Persistent fiscal deficits, heavy sovereign debt loads, and shifting central bank reserves continue to provide a solid long-term foundation for the metal.
According to commodity analysts at ANZ, gold's long-term trajectory remains exceptionally bullish. Ongoing retail diversification in Asia, combined with sovereign central banks steering foreign exchange reserves away from heavy U.S. dollar reliance, is expected to absorb short-term corrections. Analysts project that while upside movement may face near-term hurdles, bullion is firmly positioned to cross the $5,000-per-ounce mark in 2027.
Crude Oil Rebounds After Fresh Middle East Tensions
The energy complex added an extra layer of market unpredictability on Monday. Brent crude futures stabilized to close at $109.16 per barrel after wiping out earlier steep losses.
Oil prices had initially slumped following U.S. executive orders aimed at easing sanctions on Russian fuel flows and waiving certain import tariffs. However, that supply-driven relief was rapidly cut short following reports of coordinated Houthi military strikes against major energy infrastructure across Saudi Arabia, including key Saudi Aramco facilities in Yanbu and the Shaybah oil field. The sudden flare-up reignited supply disruption concerns across global logistics corridors, leaving markets on high alert.