Gold: “Bond markets remain in the driver's seat”

French government bonds, record yields in the U.S., and a weak euro are currently shaping market conditions. Michael Blumenroth explains why developments in the bond markets are currently crucial for the price of gold.October 9, 2026. FRANKFURT (Xetra-Gold). One of my favorite quotes from the business world is attributed to James Carville, who served as an advisor to then-U.S. President Bill Clinton, and dates back to the early 1990s. I’ve probably quoted it a hundred times already, but not here yet. So here goes: It translates roughly as follows: “I used to think that if there were reincarnation, I’d like to come back as a president, a pope, or a baseball player. Today, I’d like to come back as the bond market. The bond market can intimidate anyone.”Government Bonds: Influence on PolicyThe backdrop to this was the Clinton administration’s realization that financial markets—particularly the government bond market—can exert significant influence on economic policy. When investors fear higher budget deficits or unsound fiscal policy, they demand higher yields on government bonds. This increases borrowing costs for the government and often for the economy as a whole. A prominent example of Carville’s thesis was the resignation of British Prime Minister Liz Truss in October 2022, which was virtually “forced” by the bond markets.French Bonds Under PressureWhy am I bringing all this up here? The reason is that the bond markets are currently clearly setting the tone for the other market segments. The focus remains particularly on French government bonds, whose yields rose sharply on Thursday and Friday of last week. After a temporary lull at the start of the week, pressure on French government bonds—and, in their wake, on Italian and Greek government bonds—increased again. Yields on long-term U.S. government bonds also hit 24-year highs once more.Rising Yields Weigh on GoldTo cut a long story short: As explained last week, rising yields on government bonds generally create headwinds for gold prices. Added to this was increasing downward pressure on the euro, which fell to a 17-month low against the U.S. dollar.Please keep in mind that I am merely the messenger: Although the gold price did show occasional short-term rebounds—after all, the yellow metal is considered a “safe haven” in turbulent market conditions—on the whole, the pressure from bond yields and the strength of the U.S. dollar proved greater, causing prices to decline moderately over the course of the week.Gold Price: Ups and Downs Over the Course of the WeekOn Thursday morning of last week, gold prices were still trading at around $4,160 per ounce. After rising to $4,225 on Friday, headwinds intensified, causing gold prices to close out the week at around $4,140. After some ups and downs within a relatively narrow trading range, prices continued to fall yesterday, dropping to $4,067. At least prices recovered somewhat yesterday evening and this morning. Gold is currently trading at $4,125.Weak Euro Slows Price DeclineDue to the euro’s weakness against the U.S. dollar, the Xetra gold price is trading only slightly below the previous week’s level. During regular trading hours, it initially rose from 118.4 euros per gram last Thursday morning to about 120.75 euros on Friday. While it initially managed to hold steady around the 118.5-euro level for a while, it fell yesterday to the week’s low so far of 117.1 euros, or currently 118.2 euros.Outlook: Bond Markets Set the PaceThe bond markets remain in focus. A stabilization in the bond markets is likely the most important prerequisite right now for gold prices to resume a sustained upward trend. However, should the sharp volatility in the bond markets persist, gold could potentially once again emerge as a “safe haven.” In the medium term, many fundamental factors point to higher prices, but in the short term, the downward pressure could persist for the time being.I wish all readers a wonderful weekend, even though summer seems to have come to an end.By Michael Blumenroth, October 9, 2026 © Deutsche Börse AG About the Author Michael Blumenroth is an investment strategist in Deutsche Bank's Chief Investment Office, specializing in commodities and currencies. He has many years of experience trading products in these areas, particularly precious metals.

Gold: “Bond markets remain in the driver's seat”

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