Six Factors Behind Gold’s Ongoing Decline

Gold tumbled 31% from its January peak of $5,598 to a 12-month trough around $3,870 on October 30. Six factors account for the decline, with technical charts suggesting where the selloff might stop.

After the US midterm election outcome weakened the dollar, gold recovered to roughly $4,136, almost 7% above the October 30 low. The durability of this rally hinges on several overhead resistance levels.

Six Key Drivers Behind Gold’s Drop

1. A hawkish Federal Reserve. The central bank lifted its benchmark rate to 3.75%–4.00% in September, the first increase since July 2023. On October 28 it kept the rate unchanged but signaled further tightening remains possible.

According to the FedWatch tool, traders see roughly 78% probability of a 25-basis-point rate increase in December. At the same time, inflation has exceeded the Fed’s 2% goal for 67 consecutive months.

2. Higher yields and a firm dollar. The 10-year Treasury yield reached 5.34% in early October. Rising yields increase the opportunity cost of gold, as the metal offers no interest.

3. The oil shock. The US-Iran conflict drove Brent crude to approximately $112. More expensive energy boosts inflation expectations, thereby increasing the likelihood of additional Fed tightening. Consequently, gold has generally declined when oil has climbed this year.

4. Forced selling. On October 30, gold lost roughly 3.5% in one day while the Nasdaq fell 2.9%. Commerzbank analysts noted that the tech sell-off may have forced investors to liquidate safe-haven holdings to cover losses. Silver performed even more poorly, according to a recent analysis.

5. ETF outflows. Gold ETFs saw $1.21 billion in net redemptions during the week ending October 23, according to World Gold Council figures. This halted a 13-week streak of inflows, with US funds accounting for the largest share of withdrawals.

6. Weak Chinese jewelry demand. Chinese consumption of gold jewelry dropped 33.9% compared with a year earlier in the first three quarters of 2026, reported Xinhua. Demand for bars and coins increased 26.3%, resulting in overall consumption remaining roughly unchanged.

However, not all indicators are negative. Central bank purchases totaled 321 metric tonnes in Q3, the most rapid pace since late 2024. Global gold ETF holdings also hit a record 4,256 tonnes, according to the World Gold Council’s most recent demand report.

Gold Falls Farthest Below 200-Day Moving Average Since 2013

The SPDR Gold Shares ETF (GLD) closely mirrors spot gold. Based on Barchart data, the ETF is currently trading below its 200-day moving average by the largest gap in 13 years.

Gold $GLD is now trading below its 200-day moving average by the largest margin in 13 years 🚨 pic.twitter.com/uYOPPH1pia

— Barchart (@Barchart) November 3, 2026

The previous similar episode occurred in 2013. In April of that year, gold experienced a severe two-day slump. That decline initiated a bear market that persisted until late 2015.

Nevertheless, wide deviations below the 200-day average often foreshadow temporary rebounds. At the October 30 trough, gold was approximately 13% under the current 200-day reading of $4,468. With the price now around $4,136, the gap has shrunk to roughly 7%.

Weekly Chart Indicates Bearish Trend Even After Rebound

Gold has registered a pattern of descending peaks and troughs since the January high. The Supertrend indicator shifted to bearish in June 2026 and currently stands at $4,582.

The price remains under the 20-week moving average (blue line) of $4,211. That average provided support during the 2025 uptrend but has since become resistance.

Nonetheless, the current weekly candle indicates a rise of roughly 6.7%. Gold rebounded from the 0.5 Fibonacci retracement level of $3,943, within the $3,900–$4,000 support area. The weekly candle has not yet completed, so the rebound awaits confirmation.

The Relative Strength Index (RSI) stands at 45.6 after recovering from the mid-30s. However, no bullish divergence has appeared on the weekly chart yet.

Should the upswing continue, the 20-week moving average of $4,211 presents the initial obstacle. Beyond that, the $4,300–$4,400 range coincides with the 0.382 Fibonacci level of $4,333.

Gold Price Forecast Depends on Gaussian Channel Test at $4,145

On the daily chart, the outlook stays bearish, with gold positioned under the Gaussian Channel. The price is currently testing the channel’s lower boundary at $4,145 as resistance. Thursday’s peak of $4,147 reached that level almost precisely.

A daily finish above $4,145 might pave the way for a climb to the channel midline of $4,272. That objective lies slightly under the 0.382 Fibonacci level of $4,333, approximately 3%–5% above the current price.

A failure, however, would bring the $3,900–$4,000 support area back into consideration. A daily finish under the 0.5 Fibonacci level of $3,943 might open the door to the 0.618 retracement of $3,552, roughly 14% lower.

The 200-day moving average (blue line) of $4,468 stays the critical threshold for a trend change. This average has rolled over and now slopes downward. Gold would probably need to recapture it to resume a bullish trajectory.

On a brighter note, the daily RSI has risen to 52.8. It moved above both its signal line and the 50 midpoint, an early indication of strengthening momentum.

Factors That Could Influence Gold Next

Macroeconomic data will probably determine gold’s next move. The US employment report (Friday), CPI (November 10), and the Federal Reserve’s December 8–9 meeting represent the upcoming catalysts.

The midterm election outcomes have already provided some respite. Democrats secured control of both congressional chambers, which drove the dollar index to a one-month trough around 101.3. The 10-year yield also declined to roughly 4.85%.

Brent crude has fallen roughly 15% this month to around $98. The decline came after reports about US-Iran peace negotiations, which also boosted gold.

Analysts are divided on where the bottom lies. Yuxuan Tang of JPMorgan Private Bank anticipates additional Fed rate increases and perceives further downside potential.

“Gold will find a solid bottom when rates peak.”

Conversely, Suki Cooper of Standard Chartered identifies $3,886 as the key level for gold to maintain. She continues to forecast a long-term recovery, supported by dollar diversification and currency debasement narratives.

Should gold maintain $3,943 and surpass $4,145, the rebound may extend to $4,333. However, a finish below $3,870 would indicate that the 31% decline still has further room.