Gold prices fell on Thursday, as a firmer US dollar and uncertainty over the Federal Reserve’s next move threatened bullion’s tentative recovery.
Spot gold dropped 0.7% to $4,039.26 an ounce by 00:44 GMT, while December US futures traded near $4,051. The retreat followed three sessions of modest gains after the Fed left the benchmark rates unchanged.
With traders still expecting another interest-rate increase this year, gold is struggling to move away from $4,000. A deeper break could expose the $3,900 region, although Thursday’s US inflation report may change the outlook.
Gold price today: Why the Fed’s rate pause failed to rescue
The Fed kept its benchmark rate at 3.75%–4% on Wednesday, as expected, but the decision was not unanimous.
Policymakers Lisa Cook and Beth Hammack opposed the pause, favouring an immediate quarter-point increase.
Chair Kevin Warsh offered little guidance on December, leaving investors to weigh persistent inflation against the central bank’s reluctance to tighten immediately.
Markets priced roughly a 78% probability of an increase in December, down from 84% before the announcement. That remains a difficult backdrop for gold, which pays no interest and faces competition from yield-bearing assets.
Tony Sage of Critical Metals told The Wall Street Journal on Thursday, said softer US inflation and growth readings could ease yields and support bullion. Stronger figures, however, might lift the dollar and prolong the decline.
The prospect of further tightening continues to trouble gold investors.
Gold’s safe-haven appeal meets an inflation problem
The weakness is striking because geopolitical tensions would ordinarily attract safe-haven buyers.
The conflict involving Iran has instead lifted energy costs, keeping inflation risks alive. Higher oil prices threaten to prolong restrictive monetary policy, undermining gold’s appeal even as uncertainty increases.
David Scutt, a StoneX market analyst, argued in research published on Wednesday that gold’s failure to rally was unusual given the recent decline in real Treasury yields and some dollar weakness.
He suggested month-end positioning or forced sales to cover losses elsewhere could partly explain the muted recovery, while acknowledging that the precise cause remains uncertain.
His technical assessment was similarly cautious. Gold remained below several medium and longer-term moving averages, with momentum indicators still favouring sellers.
The metal therefore faces two potential sources of pressure: interest-rate uncertainty and investors raising cash after losses in other markets.
Gold price forecast: Is $3,900 next?
The immediate test is $4,000, a psychological threshold that gold has struggled to hold this month.
StoneX identifies a broader support zone extending down to $3,942.55. A sustained break beneath it could bring $3,895 into view, with $3,791 a more distant downside reference. These are technical scenarios, not guaranteed destinations.
On the upside, a recovery above $4,066.57 would be an initial indication that buyers are regaining control.
Roukaya Ibrahim, chief commodities strategist at BCA Research, told Kitco News this week that gold looked oversold enough for a rebound.
She nevertheless expected persistent inflation and a potentially stronger dollar to limit any lasting rally.
Attention now turns to September’s US Personal Consumption Expenditures inflation figures, due at 12:30 GMT on Thursday.
A hotter reading could strengthen the case for December tightening and put $4,000 under renewed pressure. Softer inflation could help bullion establish a firmer recovery.
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