Gold Remains Under Pressure as Prospects of Fed Rate Hikes Strengthen

Global gold prices weakened again during Tuesday’s trading session (October 20, 2026), marking a third consecutive day of decline amid mounting concerns over global inflation.

Spot gold (XAU/USD) traded at approximately US$4,123 per troy ounce—a drop of 0.42%—moving closer to the psychological support level of US$4,100. The precious metal faced increased pressure as global oil prices surged due to geopolitical tensions in the Middle East, fueling expectations that the U.S. Federal Reserve will maintain high interest rates for a longer period.

The rise in West Texas Intermediate (WTI) crude oil prices back above US$100 per barrel has been a primary factor weighing on gold. This surge was triggered by heightened risks of supply disruptions, following claims by the Houthi group of attacks on energy facilities in Saudi Arabia, alongside reports of incidents involving vessels in the Strait of Hormuz. Rising energy costs threaten to inflate production and transportation expenses, thereby intensifying global inflationary pressures. This has raised concerns that the Federal Reserve may need to sustain a tight monetary policy to bring inflation back toward its 2% target.

In the United States, September’s Consumer Price Index (CPI) and Producer Price Index (PPI) figures—both of which came in higher than anticipated—have bolstered expectations for further interest rate hikes before the end of the year. According to the CME FedWatch Tool, the probability of a Federal Reserve rate hike at the October meeting stands at approximately 15–17%, while the likelihood of an increase in December is nearing 90%. Meanwhile, the U.S. Dollar Index (DXY) is hovering around 101.88, and the yield on the 10-year U.S. Treasury note remains near 5.13%. High bond yields exert pressure on gold, as investors tend to favor interest-bearing instruments over precious metals, which offer no yield.

From a technical perspective, gold’s movement remains bearish, with prices holding below key moving averages—specifically the 50-day, 100-day, and 200-day Simple Moving Averages (SMA). In recent weeks, XAU/USD has traded within a range of US$4,100 to US$4,200, with the US$4,100 level serving as a critical psychological support. A sustained breach of this level could trigger further selling pressure, potentially pushing prices toward the US$4,000–US$3,950 per troy ounce range. Conversely, a recovery toward US$4,200 would be a necessary first step to alleviate bearish pressure. Investors are now looking ahead to the Federal Reserve meeting on October 27–28, while also monitoring oil prices, the US dollar, and Treasury yields as key determinants for gold’s next direction.

Newsmaker Conclusion

Gold prices remain under bearish pressure in the short term, driven by growing expectations of Federal Reserve interest rate hikes and elevated global oil prices. Although geopolitical tensions typically bolster demand for gold as a safe-haven asset, concerns regarding inflation and high interest rates are currently the dominant factors shaping market movements.

Source: Newsmaker.id