MediumIV Macro Policy & Sovereign Debt28 September 2026, Monday
Oil shock and rate-hike bets push gold to a seven-week low
Spot gold fell 3.3% to 4,146.51 dollars on 28 September, its lowest level since 5 August. Silver dropped 4.7%. The probability of a Fed hike in October rose from 64.2% to 70.3% in a single day.
According to an Al Jazeera report on 28 September, spot gold fell 3.3% to 4,146.51 dollars, its lowest level since 5 August. The same report said silver fell 4.7% to 61.27 dollars, while platinum lost 2.9% and palladium 4.4%. The figures vary with the time of measurement. Trading Economics recorded a 3.80% fall to 4,122.07 dollars, while USAGOLD put the day's close at 4,148.69 dollars, a loss of 3.19%. According to Trading Economics, gold is down 7.18% over the month but still 7.53% higher than a year ago.
The trigger was Brent approaching 106 dollars after Trump rejected Iran's offer to reopen the Strait of Hormuz. CME FedWatch data cited by USAGOLD showed the probability of a rate hike at the October meeting rising from 64.2% to 70.3%. Trading Economics' 10-year yield page gives a probability of about 65% for the same day. The dollar index rose 0.22% to 101.19, according to Trading Economics, and has gained 1.77% over the month. Gold pays no interest, so it loses appeal when yields and the dollar rise together. USAGOLD described the fall as a repricing in paper markets rather than a move driven by physical demand. The week's key data are Wednesday's PCE figures and Friday's jobs report.
Talay assessment
Bottom line
Gold falling on a day of rising geopolitical tension shows that markets are reading the oil shock first through rates and the dollar. As the probability of a Fed hike rises, the cost of holding a non-yielding asset goes up. That gold remains higher year on year suggests the fall is, for now, a repricing and that structural demand has not broken.
Likely effects
- Central bank reservesNegativeWeeks
For central banks holding a large share of gold in their reserves, the price fall lowers the dollar value of those reserves; in Türkiye, the CBRT belongs to this group.
- Safe-haven preferenceUncertainWeeks
When yields and the dollar rise together, safe-haven demand shifts from gold towards dollar assets.
- Household savingsNegativeWeeks
Households that keep their savings in gold see their wealth fall in the near term; in countries where the exchange rate is rising, this can be partly offset.
Possibilities, ranked
- 1Pressure persists50%
PCE comes in strong, the probability of a hike stays high and gold fluctuates near its low.
Watch: Wednesday's PCE data and the FedWatch probability for October
- 2Relief rebound35%
Data come in below expectations or the Hormuz timetable becomes clearer, the dollar eases and gold recovers part of its loss.
Watch: Dollar index and Brent
- 3Deeper sell-off15%
The oil rally continues, yields hit a new peak and gold extends its decline.
Watch: US 10-year yield and Brent
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Spot gold, 28 September▼ $4,146.51
- Dollar index▲ 101.19
- Silver▼ −4.7%
Historical context
Gold, last 6 months
- 116/09 · Fed raises its target range to 3.75–4.00% in its first rate hike since July 2023
- 216/09 · Gold recovers from a six-week low driven by rising yields, climbing to 4,311 dollars
- 322/09 · China's gold imports top 1,000 tonnes by end-August, exceeding all of 2025; central bank added 20.2 tonnes in August
- 428/09 · Oil shock and rate-hike bets push gold to a seven-week low