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07.10.2026 09:07 AM
Why Gold Can't Reverse

Gold fell again by 0.6% to $4,132/oz, wiping out yesterday's gain. Silver declined 0.8% to $60.85, and platinum and palladium also weakened. The trigger, as before, was oil — which rose after Iran stepped up attacks on tankers in the Strait of Hormuz.

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The link is simple. Expensive oil fuels inflation, and inflation forces central banks to keep rates high — and for non-yielding gold, that is the main enemy. Heads of major oil companies warn that the world's spare options to cushion the effects of the US–Iran war, now in its eighth month, are running out. Since the conflict began in late February, gold has lost more than a fifth of its value. Notably, even the escalation in the Middle East has not restored gold's safe-haven role, because the market is watching energy prices rather than fear.

Yields helped gold only partially. They retreated from multi-year highs, and the probability of an October Federal Reserve hike fell to less than one-in-five (versus about 40% a week earlier). Markets had recently been putting odds near one-in-four, so expectations continue to soften. But yields remain high, and gold still has no clear catalyst for a sustained reversal. A weak US trade report added pressure: record imports pushed the deficit to $105.6bn, yet the dollar barely softened on that news.

Central banks are the only real support for gold. That is a long-term factor and has little immediate impact on prices. The main event today is the Fed minutes from the September meeting — when rates were raised for the first time in three years. They will be released tonight and will show how deep the split is inside the committee. Dovish wording would give gold a chance to bounce.

My view: gold will remain rangebound until the minutes; after that, yields and oil will decide the direction. A hawkish minutes release together with rising Brent would restore pressure on the metal and push it toward the 4,062–4,047 area, while a dovish minutes print and falling yields would allow gold to recover some losses. As long as gold stays below key moving averages and the dollar is near yearly highs, I expect sellers to dominate.

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Technical picture: buyers need to take near resistance at $4,186 to target $4,249, above which a breakout would be difficult. The farthest target is $4,304. On the downside, bears will try to seize $4,124. If they succeed, a range break would seriously damage bull positions and drive Gold toward $4,062, with a prospect of reaching $4,047.

Miroslaw Bawulski,
Analytical expert of InstaForex
© 2007-2026
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1 day
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