Gold prices retreated on Friday, falling 0.6% to $4,063.39 an ounce by 02:48 GMT, even as Asian equities suffered a sharp selloff. The decline came as rising oil prices and expectations of further US interest-rate hikes dampened demand for the traditional safe haven. December futures dropped 1% to $4,072.90.
The pullback challenges the assumption that gold automatically benefits from stock market turmoil. While Japan's Nikkei 225 lost about 5.7% and South Korea's KOSPI briefly plunged more than 8%, bullion failed to attract safe-haven bids. Instead, the metal remained roughly 4% higher for the week, supported by earlier gains.
Why gold is under pressure
Oil prices rebounded more than 1% on Friday amid ongoing concerns about Middle Eastern supplies. Higher energy costs can feed inflation, encouraging the Federal Reserve to maintain restrictive borrowing costs. "Crude oil has rebounded mostly over the past day," Tastylive strategist Ilya Spivak told Reuters, describing the move as another inflationary setback for bullion.
Gold pays no interest, so when yields rise, the opportunity cost of holding it increases. A firmer dollar also makes bullion more expensive for overseas buyers. Additionally, investors facing losses elsewhere may sell gold to raise cash, although there is no evidence that widespread margin-call liquidations drove Friday's decline. Saxo's Ole Hansen warned earlier this week that hedge funds had sold gold futures for nine consecutive reporting weeks, leaving the metal vulnerable to further volatility.
Goldman Sachs slashes forecast
Goldman Sachs lowered its end-2026 price target to $4,150 an ounce from $4,650 on Thursday, a reduction of nearly 11%. The bank also cut its end-2027 forecast to $4,800 from $5,400. The revisions reflect a more hawkish Federal Reserve outlook, rather than a view that gold's longer-term investment appeal has disappeared.
Traders assigned a 68% probability to another US rate increase in December, according to CME FedWatch figures. Two Fed officials also argued on Thursday for measured increases to contain persistent inflation. Higher interest rates can lift real bond yields and discourage investment in non-yielding assets. Goldman also warned that stronger oil prices and sharp equity losses could trigger short-term selling as investors reduce exposure. Even so, the bank expects central-bank purchases and demand from investors concerned about government finances to provide support.
Its revised $4,150 target remained approximately 2% above Friday morning's spot price, indicating limited potential upside rather than an outright bearish forecast. It did not predict an immediate price collapse.
US jobs report in focus
The next test comes with October's US employment report, due at 13:30 GMT on Friday. Economists expect 65,000 additional jobs, unemployment of 4.2% and annual wage growth easing to 2.9%. A stronger report could reinforce expectations of further rate increases, lifting Treasury yields and the dollar. Softer hiring or wages could ease that pressure.
"Conversely, a downside surprise could help consolidate the recent rebound in alternatives to fiat money, such as gold and bitcoin," CMC Markets analyst Luis Francisco Ruiz wrote on Thursday. Stronger data could support the dollar and bond yields.
Gold reached $4,146.63 on Thursday before retreating. The $4,000 level remains an important psychological reference, while $4,125 and the recent peak near $4,147 represent potential resistance. Failure to defend $4,000 could undermine the recent recovery. Fed Vice Chair Michelle Bowman is also scheduled to speak later Friday.
This article is for informational purposes only and does not constitute financial advice.
