Gold prices have extended their slide, falling below the key $4,000 support level to their lowest since July last year. The precious metal is now trading around $3,995, roughly 29% below its 2025 peak, as rising oil prices intensify inflation worries and dampen hopes for near-term rate cuts.
Oil surge pressures gold
The recent rally in crude oil has been a major headwind for gold. Brent crude settled at $117.35 last week, while West Texas Intermediate (WTI) climbed to $103, both up about 67% from their July lows. This surge has pushed average U.S. gasoline prices to $4.29 per gallon, with diesel near record highs despite recent sanctions relief on Russian exports.
Higher energy costs are expected to keep inflation above the Federal Reserve's 2% target. September's consumer price index rose 3.7% year-over-year, with core inflation at 2.6%. As a result, the Fed is unlikely to cut rates soon. Economists anticipate the central bank will hold rates steady at this week's meeting, but Fed Chair Jevin Warsh has left the door open for another hike. Market odds for a December rate increase have jumped to over 80%.
Potential supports for gold
Despite the bearish pressure, some factors could support gold. U.S. Treasury yields have been retreating, with the 10-year yield dropping to 4.99% and the two-year to 4.686% from its year-to-date high of 4.95%. Gold often benefits when yields decline, as it reduces the opportunity cost of holding non-yielding assets.
Additionally, the SPDR Gold Trust (GLD) has seen inflows of over $430 million in the past 30 days, indicating that some investors are positioning for a rebound.
Technical outlook: death cross signals more downside
On the daily chart, gold has broken below the critical $4,000 support, and a death cross has formed—where the 50-day moving average crosses below the 200-day moving average. This pattern historically suggests further declines. The price has also slipped below the Supertrend indicator, reinforcing the bearish sentiment.
Analysts see the next support at $3,800, while a move above $4,131 would invalidate the current bearish outlook.
This article is for informational purposes only and does not constitute financial advice.
