Gold slides below $4,000 in steepest weekly drop in four months as crude oil revives Fed rate fears

Gold's trajectory now rests on the Fed's tone, given a widespread expectation of a hold. A hint that a December hike is still possible would probably drive yields and the dollar higher, sending bullion back under $4,000. A more neutral statement, however, could spark a recovery rally from oversold levels. Oil acts as the main conduit. If Middle East tensions escalate further and push crude higher, the impact would likely hurt gold by raising inflation and rate expectations, rather than providing safe-haven support. The clearest path to a short-covering rally would be a softer PCE report on Thursday. Silver and gold miners, who lagged last week, are expected to experience higher beta moves regardless of the direction.

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The very geopolitical turmoil that historically boosted gold is now fueling selling, as oil-linked inflation concerns sustain pressure for Fed rate hikes, making $4,000 the critical threshold this week.

Key points at a glance:

• Spot gold declined roughly 4% last week, marking its steepest weekly drop since at least four months. It settled near $4,010 after a temporary dip under the $4,000 level, the first time since mid-July.
• Crude above $100 a barrel amid escalating Middle East conflict stoked inflation worries, keeping a December Fed rate increase a possibility.
• A stronger greenback, Treasury yields close to 5%, and margin-call selling tied to the technology rout compounded the pressure. Silver dropped to its lowest point in almost a year.
• UBS indicated gold might revisit $4,000 but predicts structural dip-buyers will create a floor at that level. HSBC reduced its 2026 forecasts for platinum and palladium.
• The Fed announces its decision on Wednesday. Markets strongly anticipate a hold at 3.75%-4.00%. US PCE inflation data is due Thursday.

Entering a decisive week for US monetary policy, gold is on the defensive. It just recorded its worst weekly drop in over four months, momentarily falling under the $4,000 threshold after climbing oil prices reawakened inflation concerns and solidified the view that the Fed will hold rates elevated.

Over the week ending October 23, spot gold lost around 4%, hitting a three-month trough near $3,975 on Friday before closing near $4,010. This marked the first time the metal changed hands below $4,000 since mid-July, prolonging a downtrend that started in late August when prices reached a peak close to $4,700. The performance of silver was even weaker, dropping to levels not seen in close to a year.

The principal catalyst was oil. Crude prices pushed past $100 per barrel as Middle East hostilities grew, causing anxiety that elevated energy costs will sustain high inflation. This expectation has left a December Fed rate hike as a live possibility and increased the opportunity cost of holding yield-less bullion, overriding any safe-haven buying the conflict might generate. A stronger dollar and US Treasury yields sitting near 5% intensified the strain. Analysts noted that a rout in technology stocks caused margin calls, compelling some investors to offload gold and silver assets to meet the demands.

The $4,000 mark now serves as the central reference for the market. One analyst stated that traders are protecting this level. A decisive breach would suggest the market is no longer betting on rate relief but is instead pricing in persistent inflation, high yields, and a robust dollar. UBS's Giovanni Staunovo offered a more upbeat perspective, warning that while gold might test $4,000 again soon, structural dip-buyers are anticipated to create a solid floor near that price point. Elsewhere in the sector, HSBC lowered its average price projections for 2026 platinum and palladium in a note last week, attributing the revision to changing market fundamentals and investor selloffs.

Focus now pivots to the Federal Reserve. It is expected to announce its rate decision on Wednesday at 14:00 ET (18:00 GMT) following a two-day gathering. Traders predominantly expect a hold at 3.75%-4.00% after the September rate rise, leaving the accompanying statement and questions from the Chair to set expectations for any subsequent tightening. US PCE inflation numbers are due on Thursday at 08:30 ET (12:30 GMT). These two events will probably determine whether the $4,000 level is defended or a more significant correction follows.