Solid Gold Futures – Global gold prices faced sharp downward pressure during Thursday’s (Oct 22) trading session, with XAU/USD breaking below the psychological level of US$4,100 per troy ounce. Spot gold traded around US$4,088.80—a decline of approximately 1.30%—extending the selling pressure seen over the last few sessions.
The pressure on gold stems primarily from concerns that inflation in the United States could remain elevated due to rising global oil prices. Tensions in the Middle East—including threats to energy infrastructure and oil supply routes—have increased the risk of higher energy costs, which could potentially slow the disinflation process.
These conditions increase the likelihood that the Federal Reserve will maintain its current monetary policy for longer. High interest rates generally weigh on gold, as the precious metal does not yield a return; consequently, investors are becoming more cautious about increasing their positions ahead of the Federal Reserve’s meeting on October 27–28.
Interestingly, this weakness in gold occurred even as the US Dollar Index fell by approximately 0.10% to 101.247, and the yield on the 10-year US Treasury note eased to around 5.082%. This suggests that the pressure on gold prices is not driven solely by the dollar or bond yields, but may also reflect profit-taking, position adjustments, and liquidations ahead of the Fed’s policy decision.
Other precious metals also faced pressure, with silver falling by approximately 2.71% to US$56.405 per troy ounce. While the market currently anticipates that the Fed will hold interest rates steady at its October meeting, the possibility of a rate hike in December continues to dampen buying interest in gold.
From a technical perspective, the US$4,073 level serves as a key support area to watch. If that level is breached, selling pressure could potentially push gold toward US$4,000 per troy ounce. Conversely, a recovery above the US$4,100–US$4,135 range could open the door for a rebound—particularly if the US dollar and Treasury yields weaken again, or if the Federal Reserve begins to signal a more dovish policy stance. (srh)