Gold falls 0.5 percent to $4356 as rising yields weigh ahead of Trump-Xi summit

Gold prices fell during Asian trading on Monday, reversing some of the previous week's gains as climbing U.S. Treasury yields and a stronger dollar weighed heavily on non-yielding bullion. Spot gold retreated, slipping alongside U.S. Gold futures as investors recalibrated their portfolios ahead of a high-stakes Washington summit between world leaders. The precious metal's retreat underscores broader macroeconomic pressures as markets digest recent central bank policy tightening and navigate ongoing geopolitical friction.

According to Economy Middle East, spot gold stood at $4,356.02 an ounce, dropping $21.60 or 0.49 percent, while U.S. Gold futures declined 0.73 percent to $4,392.40 an ounce. This downward movement followed a hawkish policy pivot from the Federal Reserve, which unanimously raised the federal funds target range by 25 basis points to 3.75–4.00 percent on September 16. The central bank cited solid economic activity, resilient domestic spending, and persistent inflation as drivers for the move, which marks the Fed's first rate increase since 2023.

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The resulting macroeconomic environment has increased the opportunity cost of holding bullion. The U.S. Two-year Treasury yield climbed to 4.7604 percent following a 36-basis-point jump over the preceding two weeks. Reuters reported that futures markets were pricing a 56 percent probability of another Fed rate increase in October, with an additional move fully priced by year-end. Concurrently, the dollar index hovered near 100.23 after surging more than 1 percent the previous week.

Despite the broader pressure on precious metals, silver posted modest gains. Spot silver rose $0.15, or 0.22 percent, to reach $66.24 an ounce during early trading hours, demonstrating a distinct divergence from gold's downward trajectory.

Market attention is now firmly fixed on Washington, where U.S. President Donald Trump and Chinese President Xi Jinping are scheduled to meet on Thursday, September 24, in Washington. Preparatory discussions were held in New York by U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, addressing trade relations, supply chains, and a proposed bilateral mechanism for artificial intelligence safety and national security. Currency markets reflected a steady tone ahead of the summit, with the Chinese yuan strengthening to its highest level in more than three and a half years.

Broader equity markets displayed cautious optimism. As reported by Coin Central, Econotimes, and Yahoo Finance, U.S. Stock futures edged higher on Monday following a bruising week for the Dow Jones Industrial Average, which fell roughly 1.7 percent to record its third consecutive weekly decline. S&P 500 futures gained about 0.5 percent, Nasdaq 100 futures rose approximately 0.7 percent, and Dow futures climbed roughly 0.4 percent. CNBC noted that Asian equities also advanced, with South Korea's Kospi rising 1.65 percent and mainland China's CSI 300 closing 0.71 percent higher.

Geopolitical tensions in the Middle East continue to cast a shadow over global markets. Following reported missile and drone strikes targeting Riyadh over the weekend by Yemen's Iran-backed Houthis, the U.S. State Department warned American citizens to reconsider travel to the region. Despite elevated security concerns, crude oil prices eased during Asian trading as markets assessed reports of stronger regional oil flows. Brent crude fell roughly 2 percent to hover near $101.72 a barrel, providing some relief to equity investors worried about persistent inflation driven by energy costs.

As traders evaluate the competing pressures of central bank tightening, trade negotiations, and geopolitical risks, market participants await further commentary from monetary policymakers and the outcome of this week's presidential summit.