Gold prices retreated on Thursday, pressured by a firmer dollar and lingering uncertainty over the Federal Reserve's next policy move, which overshadowed the central bank's decision to hold rates steady.
Spot gold fell 0.7% to $4,039.26 an ounce by 00:44 GMT, while December futures traded near $4,051. The decline followed three sessions of modest gains after the Fed left its benchmark rate unchanged at 3.75%–4% on Wednesday.
The decision was not unanimous, with policymakers Lisa Cook and Beth Hammack dissenting in favor of an immediate quarter-point increase. Chair Kevin Warsh offered little clarity on December, leaving investors to weigh persistent inflation against the Fed's reluctance to tighten immediately.
Market pricing now shows roughly a 78% probability of a rate hike in December, down from 84% before the announcement. That backdrop remains challenging for gold, which pays no interest and competes with yield-bearing assets.
Tony Sage of Critical Metals told The Wall Street Journal on Thursday that softer US inflation and growth readings could ease yields and support bullion, while stronger figures might lift the dollar and prolong the decline.
The weakness is notable given that geopolitical tensions, such as the conflict involving Iran, would typically attract safe-haven buyers. However, those tensions have lifted energy costs, keeping inflation risks elevated. Higher oil prices threaten to prolong restrictive monetary policy, undermining gold's appeal even as uncertainty increases.
David Scutt, a StoneX market analyst, noted in research published Wednesday that gold's failure to rally was unusual given the recent decline in real Treasury yields and some dollar weakness. He suggested month-end positioning or forced sales to cover losses elsewhere could partly explain the muted recovery, while acknowledging the precise cause remains uncertain.
Technically, gold remains below several medium and longer-term moving averages, with momentum indicators favoring sellers. The immediate test is the $4,000 psychological level, which gold has struggled to hold this month.
StoneX identifies a broader support zone extending down to $3,942.55. A sustained break beneath it could bring $3,895 into view, with $3,791 as a more distant downside reference. On the upside, a recovery above $4,066.57 would be an initial indication that buyers are regaining control.
Roukaya Ibrahim, chief commodities strategist at BCA Research, told Kitco News this week that gold looked oversold enough for a rebound, but she expected persistent inflation and a potentially stronger dollar to limit any lasting rally.
Attention now turns to September's US Personal Consumption Expenditures inflation figures, due at 12:30 GMT on Thursday, which could determine whether gold can hold the $4,000 support level.
This article is for informational purposes only and does not constitute financial advice.
