Gold fell below $3,900 an ounce on Oct. 30, touching its lowest level of 2026 and extending its decline to about 30% from the January peak. Stronger-than-expected U.S. economic data and persistent inflation have revived bets that the Federal Reserve could raise rates in December. Analysts differ on how much further prices could fall, with $3,886 an ounce emerging as a key level to watch.
U.S. growth and inflation bolster rate-hike bets
Gold has come under sustained pressure and is on course for a second consecutive monthly decline. The $4,000-an-ounce level has been tested repeatedly, and its support has weakened. One factor behind the selling is U.S. third-quarter GDP growth, which exceeded market expectations.
The U.S. Personal Consumption Expenditures price index rose 0.5% month over month and 3.6% year over year in September. With growth holding up and inflation still elevated, traders are weighing the possibility of a December Fed rate increase. The central bank kept its policy rate at 3.75% to 4.00% this week, but the decision did not dispel expectations of a hike before year-end.
Analysts focus on $3,886 support
Standard Chartered analyst Suki Cooper said gold needs to hold above $3,886 an ounce. Yuxuan Tang of JPMorgan said prices could face further downside pressure until interest rates ultimately peak. Their views underscore the importance of rate expectations in shaping the outlook for precious metals.
Higher interest rates raise the opportunity cost of holding gold, which does not pay interest. Concerns about Middle East supply have pushed oil prices higher, keeping real yields elevated and adding to the cost of holding the metal. Speculative selling and outflows from gold exchange-traded funds have also amplified the recent decline.
Investors are watching whether gold can find support around $3,886 and whether U.S. growth and inflation data continue to influence expectations for Fed policy. Prices are already about 30% below their January peak, while the $4,000 level has faced repeated tests.
