Gold Nears $4,000 Breach as U.S. Inflation Resurfaces as a Threat

Global gold prices saw another sharp decline in trading on Thursday (October 29, 2026), as persistent, high U.S. inflation data fueled expectations for a Federal Reserve interest rate hike in December. Spot gold (XAU/USD) fell 1.4% to $4,008.76 per troy ounce, while U.S. gold futures for December delivery dropped 0.5% to close at $4,031.40 per troy ounce. This weakness puts gold on track for its second consecutive monthly decline, reflecting the selling pressure that continues to dominate the precious metals market. Investor concerns intensified after the Personal Consumption Expenditures (PCE) price index—a key inflation gauge for the Federal Reserve—accelerated, driven by rising costs for energy and various consumer goods.

Pressure on gold mounted further following a U.S. Department of Commerce report showing that the September PCE price index rose 0.5% month-on-month, up from a 0.3% increase in August. On an annual basis, PCE inflation reached 3.6%, while core inflation—excluding food and energy—stood at 3.1%, remaining well above the Federal Reserve’s 2% target. These figures reinforce the view that price pressures are not yet fully under control, despite a restrictive monetary policy stance. David Meger, director of metals trading at High Ridge Futures, noted that persistent inflation remains the primary factor limiting gold’s appeal. With the likelihood of further monetary tightening on the rise, investors are increasingly turning toward interest-bearing instruments that offer more attractive yields than gold.

Previously, the Federal Reserve opted to keep its benchmark interest rate unchanged during its meeting on Wednesday (October 28, 2026), in line with market expectations. However, this decision does not rule out the possibility of an interest rate hike by the end of the year, especially since the latest inflation data indicates that price pressures remain quite strong. According to the CME FedWatch Tool—as cited in market reports—market participants estimate an approximately 80% probability of an interest rate hike in December.

These expectations are likely to keep pressure on gold, driven by a stronger US dollar and an increase in the opportunity cost of holding the precious metal. Investors will now closely monitor inflation trends, energy prices, and statements from Federal Reserve officials to gauge the direction of monetary policy and the outlook for gold as the year draws to a close.

Conclusion

Persistent, high US inflation remains the primary obstacle to a recovery in gold prices. Although the Federal Reserve kept interest rates unchanged in October, growing expectations for a hike in December have led investors to remain cautious regarding the precious metal.

From a technical perspective, the US$4,000 level serves as a significant psychological support for XAU/USD. A sustained break below this level could intensify selling pressure, while a recovery toward the US$4,050–US$4,100 range might serve as an early sign that the pressure is easing—though it would not yet confirm a trend reversal.

Market Impact: High PCE (Personal Consumption Expenditures) data tends to bolster the US dollar and reinforce expectations for higher interest rates; meanwhile, gold remains at risk of continued pressure as long as inflation fails to show a convincing slowdown.

Source: Newsmaker.id