Key Highlights

● December gold futures settled lower at $4,051.60 an ounce.

● Spot gold held closer to $4,070.

● Rising Treasury yields outweighed safe-haven demand.

● A weaker dollar offered only limited support.

Gold usually shines when geopolitical tensions flare, but rising bond yields and a hawkish Federal Reserve won out this time. December gold futures settled lower at $4,051.60 an ounce, while spot gold held closer to $4,070, finishing slightly higher.

The biggest headwind for gold was the bond market. Long-dated Treasury yields climbed after the Fed's decision, with the 10-year pushing past a key psychological threshold in its largest daily gain in a month.

Yields Beat Safe-Haven Demand

Gold pays no interest, so when yields on safe government bonds rise, the opportunity cost of holding the metal goes up, a dynamic that often caps gold's gains even when other safe-haven drivers are in play. The Fed left its benchmark rate range unchanged in a 10-2 vote, but the details leaned hawkish, with two officials dissenting in favor of a hike.

Traders raised their odds of a December hike after the decision, and higher rates for longer generally weigh on non-yielding assets such as gold.

Geopolitical Risks Did Not Fade

The pullback came despite a tense backdrop, with Yemen's Houthis claiming a ballistic-missile attack on a Saudi refinery and the possibility of renewed US strikes on Iran after the November midterms. Oil reacted strongly, settling back above $100 a barrel.

A weaker dollar normally supports gold, but the dollar index's modest move was too small to offset the pressure from rising yields, leaving gold's net move for the day modest either way.