Shares of the abrdn Physical Gold Shares ETF skidded 3.1% to $39.55 Monday as bullion crumbled under the twin weight of surging oil prices and Treasury yields at levels not seen in nearly two decades. For holders of the $7.5 billion fund — which simply holds gold bars in a Swiss vault — the sell-off is a direct hit with no corporate earnings or management lever to cushion the blow.
A Failed Diplomacy Weekend Sent Oil Higher and Rewrote the Inflation Script. Over the weekend, President Trump rejected Iran's proposal to reopen the Strait of Hormuz, and oil rose after Tehran said it would not soften its conditions.
Brent jumped to roughly $106 (+1.5–2.1%), with Houthi attacks on Saudi infrastructure adding to supply fears.
The Middle East conflict is now in its eighth month, and Brent crude is up more than 70% this year. Higher oil feeds directly into consumer prices, making it harder for inflation to cool — and that is poison for an asset like gold that generates zero income.
Treasury Yields at 2007 Highs Make Gold Costlier to Own. The 10-year Treasury yield rose to 5.21%, up 0.05 percentage points from the previous session , while the 30-year yield climbed to 5.52%.
The Fed raised rates by 25 basis points on September 16 to a range of 3.75%–4.00%, noting inflation remains elevated; gold pays no interest, so each extra basis point elsewhere raises the cost of holding it. Every tick higher in yields drains money from non-yielding stores of value like gold — and, by extension, SGOL.
Markets Are Pricing In More Pain Ahead. Investors currently expect the Fed to raise rates again by a quarter point next month, with the probability around 66%.
Key data this week — the Fed's preferred inflation gauge and September jobs numbers — could further shape the rate-hike path. If those readings come in hot, gold could test the $4,000 floor it briefly touched in June. A downside surprise, however, might offer SGOL a relief rally.
The Bigger Picture for Shareholders. Gold hit an all-time high above $5,500 in January before falling roughly 25% from that peak.
Over the past month alone, gold is down 6.4%, though still up 8.4% year-over-year. SGOL shareholders face a straightforward bet: if the Iran standoff de-escalates and yields retreat, the fund rebounds almost mechanically. If not, rising real yields could keep squeezing gold for weeks.