Gold Price Drops to Annual Low: Analysts Share Outlook

On October 30, the gold price dipped to under $3,900 per ounce, marking a new low for the year. It is now approximately 30% down from its January high.

Much of the decline is attributed to hawkish bets on the Fed, but analysts hold differing views on how much further it could drop.

Factors Behind Gold's Continuing Fall in 2026

The most recent drop puts gold on course for a second consecutive monthly loss. Meanwhile, the $4,000 level, tested often in recent sessions, is serving as a fragile support.

Robust US economic data are fuelling the selloff. GDP growth in the third quarter surpassed expectations, and September's PCE inflation rose 0.5% month-on-month and 3.6% year-on-year.

As a consequence, traders continue to expect a Fed rate increase in December. This expectation persists despite the Fed holding its rate at 3.75% to 4.00% this week.

Higher oil prices, stemming from Middle East supply fears, keep real yields elevated, raising the cost of holding gold, a non-yielding asset.

Speculative selling and outflows from ETFs further amplified the drop.

How Far Might Gold Fall Before Bouncing Back?

In the near term, analysts are staying cautious.

Suki Cooper of Standard Chartered cautioned that gold must maintain support at $3,886. A sustained break might cause a more severe correction.

Yuxuan Tang of JPMorgan Private Bank also sees more downside risk. He expects the Fed to hike rates in December and again in early 2027, which could push 10-year Treasury yields to a peak of 5.25% to 5.50%.

"Gold will find a solid bottom when rates peak," Tang said, citing thin liquidity.

Longer-term forecasts are more positive, however. A Reuters poll of 30 analysts gave median forecasts of $4,495 for 2026 and $4,650 for 2027. Cooper predicts a recovery as attention shifts to de-dollarization and currency debasement.

For now, traders have their eyes on $4,000 on the upside and $3,886 on the downside. The US midterm elections and the Fed's decision in December could determine the next move.