Global Markets Pulse: Gold Rises, Oil Falls Below $100 as U.S. Stocks Hit Records

Spot gold rose 0.21% to around $4,149.60 an ounce, while the dollar index and 10-year Treasury yield edged lower. However, elevated yields continue to increase the opportunity cost of holding a non-yielding asset such as gold. The Wall Street Journal also pointed to financial concerns in Europe as a source of safe-haven demand, although the effect remains constrained by pressure from the dollar and Treasury yields.

In its September 18 analysis, Goldman Sachs lowered its fair-value estimate for gold at the end of 2026 from $4,900 to $4,650 an ounce, while maintaining its $5,400 forecast for the end of 2027. The bank argued that continued central-bank purchases could partly offset the pressure from higher interest rates.

In oil markets, Brent crude fell 0.79% to $99.42 a barrel, while U.S. crude dropped 1.24% to $88.18. PersianGulf oil exports, excluding Iran, reached more than 81% of their pre-war level in September. The G7 agreement to release 100 million barrels of crude oil and diesel from emergency reserves has also eased concerns over shortages. However, high transportation costs and the risk of attacks on vessels suggest that the recovery in export volumes does not yet amount to a normalization of the supply chain.

At Monday’s close, the S&P 500 gained 0.66% to 7,773.95, while the Nasdaq 100 rose 0.87% to a fresh record of 31,076.44. S&P 500 and Nasdaq futures were also up around 0.1% on Tuesday. Bloomberg identifies corporate earnings and investment in artificial intelligence as key sources of resilience in equities.

Goldman Sachs, in its latest assessment, pointed to an expected 27% year-on-year increase in S&P 500 earnings per share in the third quarter, with more than half of that growth tied to companies involved in AI infrastructure.

JPMorgan also said in a Monday analysis that the surge in Treasury yields was likely excessive and pointed to strong corporate earnings as a support for equities. Oil, however, remains an uncertain variable that could slow the pace of gains.

The dollar index fell 0.07% to 102.03, while the euro gained 0.17% to around $1.124. The modest rebound came after heavy pressure on the euro on Monday. Reuters cited concerns over France’s debt and political deadlock, along with Spain’s snap election, as factors weighing on the euro.

The dollar strengthened 0.17% against the yen to 158.16. Meanwhile, Bank of Japan Governor Kazuo Ueda stressed the need to contain inflation and remain prepared to continue raising interest rates, making the central bank’s late-October meeting more significant.

The 10-year U.S. Treasury yield fell 3.2 basis points to around 5.275%. The two-year yield stood at about 4.81%, while the 30-year yield was around 5.63%. The Wall Street Journal said the surge in 10- and 30-year yields on Monday pushed them to their highest levels since 2002. Concerns over inflation, the government’s fiscal position and debt sustainability continue to weigh on longer maturities.

A comparison of today’s yield curve with August 6 shows that the two-year yield has risen by roughly 57 basis points, while the 10-year yield is about 60 basis points higher. The spread between the 10-year and two-year yields has widened only modestly, from around 43 to 46 basis points. The main change has therefore been a higher overall level of yields rather than a significant steepening of the curve.

Alongside inflation and fiscal concerns, the resilience of the U.S. economy is limiting expectations for a rapid decline in interest rates. At the same time, heavy investment by technology giants in AI infrastructure and their need for long-term financing are intensifying competition between the government and corporations for funding in the debt market. Analysts also point to rising bond issuance by hyperscalers as another source of pressure on longer-dated Treasuries, potentially keeping yields elevated even as expectations for an immediate rate hike fade.

According to today’s CME FedWatch pricing, markets assign a 78.4% probability to the Federal Reserve keeping rates at 3.75%-4% at its October 28 meeting, compared with a 21.6% probability of a 25-basis-point hike.

The probability of a hold was only 49.1% on September 29. Weaker employment data and comments from New York Fed President John Williams and Fed Vice Chair Philip Jefferson emphasizing the need for more time to assess incoming data have contributed to the shift.

However, markets still assign roughly an 85% probability that rates will remain at a higher level through the December meeting.

A $58 billion auction of three-year Treasury notes and the release of the U.S. Energy Information Administration’s short-term energy outlook are among Tuesday’s key events. On Wednesday, the minutes of the Federal Reserve’s September meeting will be released, offering investors further insight into what conditions policymakers see as necessary for additional rate hikes.