Gold was on course for a weekly decline on Friday as a sharp rise in US Treasury yields and growing expectations of further Federal Reserve rate increases reduced the appeal of an asset that does not generate interest income.

Spot gold rose 0.3% to $4,291.06 an ounce by 0844 GMT, but remained about 2% lower for the week. US gold futures gained 0.7% to $4,326.60.

The weekly decline comes as the bond market has undergone a sharp repricing. The US 10-year Treasury yield has moved to near two-decade highs, while the 30-year yield reached its highest level since 2004. Rising yields increase the opportunity cost of holding gold because investors can earn higher returns from government securities while retaining exposure to an asset considered relatively low risk.

“Ongoing inflationary pressures are driving those rate hike fears higher, which probably will stay until there’s a resolution to the issues around the Strait of Hormuz and the wider Middle East region,” said Nitesh Shah, commodity strategist at WisdomTree.

The relationship between gold, oil and interest rates has become cordial and toxic in the current market. Higher oil prices threaten to keep inflation elevated, which increases pressure on the Fed to maintain or further tighten monetary policy. Higher interest rates then strengthen the incentive to hold yield-bearing assets, creating a headwind for bullion.

Fed Tightening Changes The Gold Equation

The Federal Reserve raised interest rates by 25 basis points last week, its first increase in three years, and signaled that additional increases could follow. Markets are now pricing a roughly 71% probability of another rate increase in October and a 95% probability of a December hike, according to the CME FedWatch Tool.

That represents a significant shift in expectations for an asset class that has benefited from expectations of lower interest rates and persistent concerns about inflation, currency debasement, and geopolitical risk.

Gold’s traditional role as an inflation hedge has not disappeared, but the current environment illustrates why inflation alone does not determine its direction. If inflation rises at the same time as interest rates remain low or negative in real terms, gold can become more attractive. If inflation rises while central banks respond aggressively with higher rates, the resulting increase in real and nominal yields can weigh on bullion.

That tension is now playing out in the market.

The latest US economic data have reinforced expectations that the economy remains sufficiently resilient for the Fed to continue tightening. New York Fed President John Williams said Thursday that it was reasonable to expect the central bank could need to raise rates again before the end of the year.

The result is a more difficult backdrop for gold, even though the same inflation pressures supporting higher rates are also creating reasons for investors to maintain exposure to hard assets.

Middle East Remains The Key Variable

The geopolitical situation is adding another layer of uncertainty. US and Iranian negotiators in New York are exploring a potential agreement under which Tehran would reopen the Strait of Hormuz while Washington would lift its economic blockade of Iran, according to sources close to the talks.

Any credible progress toward reopening the waterway could put downward pressure on oil prices and, in turn, reduce some of the inflation premium embedded in global markets.

But that would have mixed implications for gold.

Analysts have explained that lower oil prices could reduce inflation expectations and diminish the need for aggressive monetary tightening, potentially supporting bullion through lower yields. At the same time, a successful diplomatic resolution would reduce one of the major sources of geopolitical demand for safe-haven assets.

The market has already demonstrated how quickly expectations can change. Gold and equities recovered from their session lows after reports that Washington and Tehran were exploring a phased path out of the conflict.

Oil, however, remains elevated. Brent crude rose more than 3% to nearly $107 a barrel after a Houthi missile attack on Saudi Arabia revived concerns about further supply disruptions.

“This just reinforces the view that we’re dealing with one major market catalyst right now,” said Bill Northey, senior investment director at U.S. Bank Wealth Management. “It’s really all about oil and inflation and the effect on interest rates, and then the interest rate cascading across the capital markets.”

That chain is now defining the broader investment environment: geopolitical developments affect oil, oil affects inflation expectations, inflation influences Fed policy, and interest-rate expectations then move bonds, currencies, equities and precious metals.

Gold Still Has Structural Support

The current decline does not necessarily eliminate the longer-term arguments supporting gold. Physical demand in India increased modestly this week as lower prices attracted buyers ahead of the country’s festive season. That provides some support to the market at a time when financial investors are reducing exposure.

Central-bank demand is another structural source of support. Gold has been used by central banks as a reserve asset, especially as governments seek to diversify away from concentrated exposure to major currencies.

Nikos Tzabouras, senior market analyst at Jefferies-owned Tradu.com, said lingering concerns over government deficits could revive demand for hard assets.

“Lingering deficit fears could revive the debasement trend that drives investors toward hard assets like gold,” he said. “Alongside persistent central bank demand, the precious metal has a credible case for a strong fourth-quarter recovery, should the macro winds begin to shift.”

The argument is that gold’s investment case does not depend exclusively on interest rates. Concerns over government debt, fiscal sustainability, currency purchasing power and geopolitical instability can all influence demand.

That has yielded a potential counterweight to the pressure from higher Treasury yields.

The immediate problem is that those longer-term factors are competing with a powerful short-term force: the repricing of US monetary policy.

The S&P 500 Took A Smack

The pressure on gold is part of a broader adjustment across financial markets. The S&P 500 ended Thursday almost unchanged, falling 0.02% to 7,704.13. The Nasdaq gained 0.01% to 26,939.37, while the Dow Jones Industrial Average fell 0.31% to 51,349.98.

Eight of the 11 S&P 500 sectors declined, led by materials, which fell 1.18%, and consumer staples, which lost 0.96%. The market’s breadth was weak. Declining stocks outnumbered advancing shares in the S&P 500 by about 1.9 to 1. The index recorded 14 new highs and 41 new lows, while the Nasdaq recorded 53 new highs and 238 new lows. That indicates that the headline index performance is masking considerable dispersion underneath the surface.

The resilience of the major indexes has been supported in part by technology and AI-related stocks. Microsoft fell 0.5%, and Broadcom lost 1.3%, while Advanced Micro Devices rose 2.4%. Meta Platforms gained 4.5% following the launch of a small handheld device linked to its AI assistant.

Oracle fell 3.5% after a report that it had sent a “force majeure” notice to a New Mexico data center. Blue Owl, the project’s developer, also fell sharply.

The contrast between strong AI-related earnings expectations and rising bond yields is getting thin. Higher Treasury yields raise the discount rate used to value future corporate earnings, making highly valued growth stocks more sensitive to changes in interest rates.

The S&P 500 was trading at just under 19 times expected earnings this week, its lowest valuation since 2023, according to LSEG data. Much of the recent increase in earnings expectations has been driven by AI-related companies. That means the equity market is simultaneously benefiting from expectations of strong AI-driven earnings and facing a higher cost of capital.

Other Precious Metals Remain Under Pressure

Gold was not alone in facing a difficult week. Spot silver rose 1.1% on Friday to $64.62 an ounce, while platinum gained 0.6% to $1,758.54. Palladium fell 1.1% to $1,254.73. All three metals were still heading for weekly losses.

The divergent daily moves do little to change the broader picture. Higher yields and tighter monetary expectations have created a challenging environment across precious metals, even as physical and industrial demand provide support for individual markets.

For gold, analysts say the critical variable remains the direction of real yields and expectations for the Federal Reserve. If oil remains above $100 and inflation expectations continue rising, the Fed may face pressure to maintain its tightening cycle, increasing the opportunity cost of holding bullion.

A meaningful decline in oil prices, evidence of softer inflation, or a deterioration in US economic activity could have the opposite effect by reducing expectations for additional rate hikes and lowering Treasury yields.

Saudi Arabia’s diversion of crude exports through the Strait of Hormuz is pushing ship-to-ship transfer operations in the Gulf of Oman to their limits, tightening the availability of supertankers and driving shipping costs sharply higher as Middle Eastern producers seek alternative routes following the disruption of Red Sea exports.

Saudi Aramco has sold more than 60 million barrels of crude for ship-to-ship transfers off Sohar, Oman, this month and next, according to trade sources and analysts cited by Reuters. The surge follows the September 13 attack on Saudi Arabia’s East-West Pipeline, which halted crude exports from the Red Sea port of Yanbu.

Saudi crude exports through Hormuz are expected to rise to about 3.6 million barrels per day in September, from roughly 900,000 bpd in August, according to Kpler data. That represents an increase of almost 3 million bpd and is creating a substantial additional requirement for very large crude carriers, or VLCCs.

Kpler analyst Panagiotis Krontiras estimated that the additional Saudi volumes alone would require between 36 and 40 VLCCs, with each vessel capable of carrying about 2 million barrels of crude.

The pressure on shipping capacity is already evident in freight markets. The daily time-charter rate for a VLCC transporting Middle Eastern crude to China reached a record $1.27 million on Monday, according to LSEG data.

Anoop Singh, head of global shipping research at commodity broker Oil Brokerage, said the number of additional VLCCs needed to move the same volume of oil had risen to 40 in September from 24 in August.

“That 2 million bpd uplift in Saudi flows will generate additional demand for 15 VLCCs for shuttle runs alone,” Singh said in a September 23 note.

He added that another 20 VLCCs were effectively trapped in the Mediterranean while awaiting the restoration of Yanbu operations.

The disruption shows that a relatively localized infrastructure attack can create wider bottlenecks across the global oil transportation system. Saudi Arabia has been able to maintain crude exports by redirecting barrels through Hormuz, but the alternative route requires additional vessels and, in many cases, ship-to-ship transfers before the cargo can continue toward Asian refineries.

Hormuz Congestion Spreads Across Gulf Oil Trade

The pressure is not coming from Saudi Arabia alone. Increasing exports from other Gulf producers, including Iraq and the United Arab Emirates, are also relying on ship-to-ship transfers outside Hormuz, adding to demand for tugboats, crews and other services required to move crude between vessels.

Before the war, most crude cargoes from Gulf producers other than Iran were typically loaded directly onto vessels bound for their final destinations. The disruption has changed that pattern, forcing more cargoes into a transfer system that has limited capacity.

“VLCC STS operations have struggled to keep pace,” Vortexa analysts said in a September 21 note.

The company estimated that ship-to-ship transfers involving crude loaded on VLCCs from ports west of Hormuz have remained at around 6 million bpd since the end of August, equivalent to roughly three VLCC pairs beginning STS operations each day.

Congestion is now extending the amount of time required to complete transfers.

“Congestion is getting worse near the Strait of Hormuz due to long STS queues,” Vortexa analyst Emma Li said, adding that an STS operation now requires nearly 10 days, compared with five to seven days previously.

The longer turnaround times effectively remove vessels from the available tanker fleet for extended periods. That means even if sufficient crude is available, producers and buyers may struggle to find ships capable of moving it efficiently.

Chinese buyers are already asking sellers about alternative transfer locations, including waters off India’s west coast and Malaysia, Li said. Some are also seeking direct deliveries to refineries to avoid the increasingly congested STS network around Hormuz.

One example is the Bahri-operated VLCC Gold Shine, which loaded about 2 million barrels of Saudi crude at Ras Tanura earlier this week and was headed toward Quanzhou in eastern China, according to Kpler and LSEG data. Sinochem and Fujian Refining, which is partly owned by Saudi Aramco, operate refineries in the area.

The shift is also being felt farther east. South Korean refiner S-Oil, majority-owned by Aramco, is sending two VLCCs to conduct ship-to-ship transfers off Vadinar on India’s west coast, according to a trader involved in the Middle Eastern crude market.

There has also been increased crude-transfer activity around Malaysia’s Linggi transshipment hub, according to a tanker owner tracking movements through the Malacca Strait.

A Singapore-based shipbroker said the economics of moving oil are changing as congestion builds. In some circumstances, it may now be cheaper for a VLCC to discharge crude into smaller vessels, which can then transport it toward North Asia, rather than keeping the supertanker tied up for a longer direct voyage.

The immediate consequence is higher transportation costs, but the broader implications extend into the oil market. Longer voyages, higher tanker rates, and congestion increase the delivered cost of crude for Asian refiners. If the disruption persists, buyers may compete for both available cargoes and shipping capacity.

The episode also reveals the importance of Saudi Arabia’s alternative export infrastructure. The East-West Pipeline was designed to provide the kingdom with a route that reduces its dependence on Hormuz for exports from the Red Sea. With Yanbu disrupted, more Saudi barrels are being forced back through the strategically important strait, adding pressure to a maritime chokepoint already handling substantial volumes of Gulf crude.

While the oil itself is currently continuing to move, the cost and complexity of moving it are rising rapidly. The record VLCC rates and growing STS queues show that shipping capacity has become an important constraint in the Middle East oil trade. If Yanbu remains unavailable for an extended period, the strain on tankers and transfer infrastructure could intensify further.

Oracle’s decision to protect itself against potential delays at a massive AI data center campus in New Mexico is exposing a growing fault line in the artificial intelligence infrastructure boom: demand for computing capacity remains strong, but financing the physical infrastructure required to meet that demand is becoming considerably more complicated.

Oracle issued a force majeure notice related to Project Jupiter, a data center campus being developed by Blue Owl’s STACK Infrastructure to support OpenAI. The move does not mean Oracle is abandoning the project. Blue Owl said Oracle, STACK and the company remain committed to Jupiter and that the notice does not change the financial commitments to the multiyear development.

But the legal protection has nevertheless unsettled bankers and investors, people familiar with financing discussions told Reuters, because it provides a real-world example of what can happen when an AI infrastructure project encounters delays after billions of dollars have already been committed.

The issue has generated huge interest because the data center industry has become one of the biggest beneficiaries of the AI investment boom. Developers are racing to build facilities capable of housing power-intensive AI computing systems, while technology companies are signing enormous capacity agreements to secure future access.

The financial structure behind those projects, however, depends on facilities being completed on schedule.

“The financing side of the AI buildout is starting to ask much harder questions than the demand side,” said Sean McDevitt, a partner at management consulting firm Arthur D. Little. “The underlying demand still appears very strong, but investors and lenders are increasingly focused on how risk is allocated.”

Power Is Becoming The Bottleneck

Project Jupiter illustrates one of the most difficult constraints facing the AI data center industry: access to electricity.

Oracle invoked force majeure because of delays in securing power for the New Mexico site, according to a person familiar with the matter. The project was expected to come online in 2028, but the person said completion is being pushed back by about a year.

The campus is designed to support enormous computing capacity. A delay therefore has consequences beyond construction schedules. It potentially postpones when Oracle can begin using the infrastructure to support its AI business and when the project’s investors can move from construction-stage returns to the higher returns expected once the facility becomes operational.

Blue Owl has about $3 billion of equity invested in the project, according to the person familiar with the terms. The investor earns a lower return during construction, with returns expected to increase once the facility is completed.

A delay therefore shifts the financial timetable for both the customer and the infrastructure investor.

The notice provides Oracle with contractual protection if circumstances outside its control prevent the project from meeting its agreed schedule. For lenders and investors, however, it raises a broader question: how should financial risk be divided when an AI data center is delayed by issues involving power, permits, construction or local opposition?

Those questions are increasingly being asked as projects become larger and contracts become more complex.

“These contracts are so rapidly evolving. If you look at a data center contract from January this year and a contract today, it’s massively different,” said Rajat Rana, a New York-based partner at law firm Quinn Emanuel.

The changes are occurring because developers, technology companies, lenders and investors are attempting to determine who bears the risk when projects fail to meet aggressive construction schedules.

The Financing Model is Under Pressure

The concerns extend beyond Jupiter. AI-related capital expenditure by the six largest US technology companies is projected to reach around $1 trillion in 2027, according to Moody’s. That represents an extraordinary financing requirement for an industry that is simultaneously dealing with higher interest rates and increasingly expensive construction.

The challenge is not necessarily a shortage of demand for AI computing. The problem is turning that demand into financeable infrastructure projects with predictable construction schedules, reliable power supplies, and contractual protections acceptable to creditors.

Rising Treasury yields have made borrowing more expensive across the economy. Investors therefore have greater alternatives to financing highly leveraged infrastructure projects, while banks are becoming more selective about how much exposure they want to take to individual data center developers and AI customers.

The Jupiter situation is consequently being viewed as a case study. Investors and lenders are examining what happens when a project backed by a major technology company runs into an unexpected delay, and contractual protections are activated.

The concern is growing because the AI infrastructure boom has encouraged developers to build facilities at unprecedented scale, sometimes before all the supporting infrastructure is fully secured.

Power has become one of the industry’s most significant constraints. AI data centers can require electricity on a scale comparable to major industrial facilities, and securing generation, transmission capacity, and regulatory approvals can take years.

A delay in any one component can therefore disrupt the economics of the entire project.

The impact is already visible in other transactions.

SB Energy, which is developing an Ohio campus intended to serve OpenAI, has also become part of financing discussions being watched by investors. The company decided this week to delay its IPO.

Blue Owl itself previously encountered difficulties syndicating financing for a $4 billion data center project in Lancaster, Pennsylvania, anchored by CoreWeave.

These developments do not establish that AI infrastructure demand is weakening. Rather, they show that the market is becoming more selective about how that demand is financed.

Community Opposition Adds Another Risk

The financing challenge is also increasingly connected to politics and local opposition. Data Center Watch estimates that at least 45 projects worth $68 billion faced opposition from community groups during the second quarter of 2026. That followed disruption involving 75 projects worth about $130 billion during the first quarter.

The objections vary by location, but concerns surrounding electricity consumption, water use, environmental effects, noise, and the impact of large industrial facilities have become significant obstacles to development.

Project Jupiter has itself faced opposition from residents and environmental groups in New Mexico.

Other major developments have encountered similar resistance. Meta’s data center project in El Paso, Texas, and Related Digital’s planned $16 billion Oracle-focused campus in Saline Township, Michigan, have faced opposition from residents.

In July, Blackstone’s QTS terminated its planned Digital Gateway data center project in Virginia and withdrew associated filings following years of planning and regulatory review.

For investors, these disputes introduce a risk that is difficult to capture simply by looking at projected AI demand. A technology company can sign a long-term capacity agreement, but that does not guarantee that the physical facility will be completed on time. Power connections, permits, environmental approvals, local politics, and construction schedules can all interfere with the timetable.

That has resulted in a mismatch between the speed at which AI companies want computing capacity and the much slower process required to build the infrastructure.

Oracle’s Growing Capital Burden

Oracle has committed enormous sums to expanding its cloud infrastructure as it attempts to capitalize on demand from AI companies. The company is increasingly relying on debt and other forms of financing to fund data center construction. Its ability to generate future revenue from AI depends not only on signing customers but also on delivering enough physical capacity to those customers.

Project Jupiter is one of the facilities expected to contribute to that expansion. Any delay therefore potentially affects the timing of revenue generation, even if the underlying customer demand remains intact. That is why investors reacted negatively when news of the force majeure notice emerged. Oracle shares fell 3.5% on Thursday, while Blue Owl fell 3.6%.

The market reaction was not necessarily a judgment that Jupiter would be cancelled. Instead, it is believed to be a sign of investor sensitivity to execution risk at a company whose AI infrastructure strategy requires exceptionally large amounts of capital.

Oracle can have strong customer demand and still face financial pressure if infrastructure cannot be brought online quickly enough. The economics of the AI boom ultimately depend on converting customer commitments into operational computing capacity.

A New Phase for The AI Infrastructure Boom

The Jupiter episode marks a potentially important transition in the AI infrastructure market. The first phase was dominated by the question of whether AI demand would justify enormous investments in chips, data centers, and power. That question increasingly appears to be giving way to a more complicated one: who should bear the risks associated with building all that capacity?

Developers want protection against unexpected costs and delays. Technology companies want guaranteed capacity without assuming every construction risk. Banks want predictable cash flows and adequate security. Infrastructure investors want returns that compensate them for committing billions of dollars years before facilities begin operating.

Those interests do not always align.

The result is a rapidly evolving contractual and financing market in which force majeure clauses, completion guarantees, power commitments, customer obligations, and construction milestones are receiving much greater scrutiny.

The U.S. government has formally sought to join Elon Musk’s legal challenge against a €120 million ($137 million) European Union fine imposed on his social media platform X, escalating a dispute over digital regulation into a broader confrontation between Washington and Brussels.

The U.S. Department of Justice said Thursday it had filed an application with the EU’s General Court in support of X’s effort to annul the penalty, which was imposed by European tech regulators under the bloc’s Digital Services Act.

The move gives the Trump administration a direct role in a case that goes beyond the financial penalty against X. At issue is whether European regulators can impose requirements on a U.S.-based technology company over its activities in the European market, and how far the EU’s digital rules can extend beyond its borders.

“The European Commission inappropriately attempted to expand its regulatory authority to reach American companies not present or operating within its jurisdiction,” Assistant Attorney General Brett Shumate of the Justice Department’s civil division said.

The EU’s action against X followed a roughly two-year investigation under the Digital Services Act, a sweeping framework that requires large online platforms to address illegal content, improve transparency and meet other obligations intended to make digital services safer and more accountable.

The Commission has maintained that the legislation is nationality-neutral and is intended to protect European consumers and democratic standards rather than target American companies.

The U.S. intervention nevertheless adds significant political weight to X’s challenge. The Trump administration has repeatedly objected to European technology regulation, arguing that rules affecting large American technology companies can function as barriers to U.S. businesses operating in Europe.

X Fine Becomes Test of Regulatory Reach

The dispute centers on the EU’s ability to enforce its digital rules against major platforms with substantial operations and users in Europe.

The Digital Services Act represents one of the world’s most extensive attempts to regulate large online platforms. It gives the European Commission powers to investigate whether very large platforms are complying with obligations covering areas such as illegal content, transparency, and systemic risks.

The X case is therefore important beyond Musk’s company because a successful challenge could affect how the EU’s digital regulatory authority is applied to other American technology companies.

The General Court has already handled a growing number of cases involving the EU’s digital-market and digital-services rules. The court’s recent decisions show that companies can successfully challenge particular aspects of the Commission’s implementation, although the broader regulatory frameworks remain in force.

The EU’s position is that companies serving European users must comply with European law. Brussels has rejected the characterization that its digital regulations specifically target American firms, arguing instead that the rules apply according to the size and nature of the services offered in the European market.

That principle is increasingly colliding with Washington’s view that European regulation can impose disproportionate burdens on U.S. technology companies.

The conflict has implications well beyond X. Apple, Meta, Google, and other major U.S. technology companies have all faced European scrutiny under the EU’s extensive digital regulatory framework. The General Court has already been asked to consider challenges involving the Digital Markets Act, including cases brought by Apple and Meta.

For the technology industry, the question is becoming whether Europe’s regulatory model will remain a regional compliance requirement or become a de facto global standard because companies cannot easily maintain separate systems for European and non-European users.

Musk and Trump Align Against EU Tech Rules

The intervention also brings the U.S. government into a dispute involving one of the Trump administration’s most prominent political allies.

Musk has supported Trump and Republican candidates and has repeatedly criticized European technology regulation. Since acquiring Twitter in 2022 and renaming it X, Musk has argued that European rules can constrain innovation and freedom of expression.

The platform has also faced sustained criticism from rights groups and researchers over content moderation, including allegations concerning hate speech, misinformation and the spread of nonconsensual sexually explicit material. Those criticisms form part of the broader disagreement over what large social-media platforms should be required to prevent or remove and how much responsibility should rest with the companies operating them.

The EU says that its framework is intended to address those risks while improving transparency and accountability. Washington’s intervention puts a different legal question at the center of the dispute: has the European Commission gone beyond the proper limits of its jurisdiction?

The DOJ’s decision does not itself determine the outcome of X’s case. The General Court will ultimately decide the legal challenge under EU law.

But the U.S. government’s participation could make the proceedings more consequential. Rather than representing only a private company’s objection to a regulatory penalty, the case now involves an explicit U.S. government argument about the jurisdictional reach of European regulation.

That could also complicate transatlantic negotiations over technology policy. American technology companies operate under overlapping regulatory regimes, while governments are simultaneously seeking greater control over artificial intelligence, social media, data and digital infrastructure.

The X case adds another dimension to that regulatory competition.

The financial value of the X fine is only one part of the dispute. The larger issue is whether the EU can continue enforcing its digital standards against U.S. technology companies without provoking broader government-to-government conflicts.

The case also arrives as the EU’s digital rulebook becomes more established. The bloc’s courts are already hearing challenges involving the Digital Services Act and Digital Markets Act, giving companies an increasingly important judicial avenue for contesting regulatory decisions.