Macro Bites – Rising Treasury Yields Challenge Gold’s Appeal, Kazakhstan Says

Saudi Arabia intercepted a fresh round of ballistic missiles launched by Yemen’s Houthis late on Monday, as the confrontation with the Iran-backed militant group shows little sign of subsiding.  The Houthis targeted Riyadh and Khamis Mushait, near the Yemeni border, according to a spokesperson for the Saudi-led coalition fighting the group.  Separately, a Houthi official said Monday there would be “swift and painful” response if the U.S. joins Saudi Arabia’s strikes.

Kazakh Central Bank Deputy Governor Aliya Moldabekova announced Kazakhstan will be seeking to lower gold’s share of its F/X reserves by about 3 percentage points by year-end ’26.  Moldabekova cited the recent increase in 10-year Treasury yields to 24-year highs as eroding the appeal of non-yielding bullion, “We haven’t seen levels like this in a long time.  This makes the dollar an attractive option, thereby reducing the appeal of gold as an investment asset.”

Saudi Energy Minister Prince Abdulaziz bin Salman said Saudi Arabia is looking to expand its pipeline crude oil capacity to as much as 10Mbpd by repurposing a domestic gas pipeline and investing in its existing East West network.  Saudi Arabia could add up to 1.2Mbpd of oil export capacity within seven to eight weeks by temporarily converting a gas pipeline for crude shipments. Up to 3Mbpd could be added in total with further investment. Bin Salman said he had told Saudi Aramco it could use the pipeline for oil transport until May, after which it would need to be cleaned and returned to gas service ahead of the summer season.

Cleveland Fed President Beth Hammack [2026 FOMC Voter] said she hopes the Fed can reduce inflation without damaging the job market, but that may entail cooling the blistering pace of corporate investment or the market driven wealth gains fueling personal consumption.  She said they are the factors supporting inflation. "If we can curb it on the capex side, then maybe it doesn't have to hit as much on the consumption side." Hammack said she feels interest rates need to move higher to restrain demand but added she would go to the Fed's October 27-28 meeting with an "open mind."