The haven bid did not show up
Monday delivered the news that gold is normally bought on. President Trump rejected an Iranian proposal to reopen the Strait of Hormuz and resume talks, WTI crude climbed to US$96.23, up 3.1 per cent, and gold futures still fell 2.9 per cent to about US$4,195 after a spot low of US$4,111, the lowest since August 5.
The morning desks framed oil as the channel into inflation, sentiment and the Bank of Canada. The afternoon adds a second-order effect: the same shock now moves gold in the opposite direction from crude.
Rebased to August 28, WTI is up 15.4 per cent while gold futures are down 7.4 per cent, a gap of 22.8 points between the two assets that both respond to Hormuz.
Both series are daily futures prices rebased to 100 on August 28; the September 28 point reflects late-session trading rather than a published settlement. Canada announced retaliation against the 50% US tariff on September 8, and the Federal Reserve raised its policy rate by 25 basis points on September 16.
Gold is priced against the ten-year yield
Gold pays no interest, so its competitor is the risk-free yield on offer. That yield has moved decisively: the US ten-year rose from 4.67 per cent on August 27 to 5.17 per cent on September 25, and on Monday it touched 5.22 per cent, the highest since June 2007. The 30-year reached 5.49 per cent, its highest since 2004.
The ten-year gained 49.5 basis points in a month, with the largest one-day jump of 15.5 basis points on September 23, and it closed above 5 per cent on only four sessions, the last three consecutive.
The September 23 gain of 15.5 basis points was the largest one-day rise in the series. Monday trading, which touched 5.22%, is excluded pending a published close.
A haven that is priced against a 5 per cent Treasury is not a pure haven. It behaves like a long-duration asset, and on days when war headlines lift yields, it sells off alongside them.
One index, two opposite trades
The TSX carried the split inside a single index. At the open, gold stocks fell 4.3 per cent and materials fell 3.3 per cent while energy rose 1.1 per cent. Agnico Eagle dropped about 4 to 5 per cent, while Suncor and Cenovus each gained about 1.5 per cent. By 11:38 a.m. the composite was down about 342 points, or 0.95 per cent, from the Friday close of 35,800.89.
The Canadian dollar sat at about 70.6 US cents, near a ten-week low, and the Canada-US two-year spread widened to about 153 basis points, the widest since February 2025. Rates, not fear, are setting the direction of the currency and of gold.
Three releases can test the reading this week: Statistics Canada preliminary August GDP on Tuesday, US August PCE inflation on Wednesday, and the US jobs report on Friday. The TSX has no session on Wednesday for the National Day for Truth and Reconciliation. The Bank of Canada and the Federal Reserve both decide on October 28, and market pricing put the chance of a Canadian hike near 59 per cent on September 25.
If gold keeps falling on days when Hormuz headlines worsen, the market is signalling that the yield, not the war, is the dominant variable.