Gold fell 6.5% in September, ending a two-month run of gains. A firmer dollar, a sell-off in US Treasuries and a sharp rise in oil prices outweighed softer US inflation data released on the last day of the month.
At a glance
- Spot gold settled at $4,158.70 an ounce on September 30, down 6.5% for the month.
- US core PCE inflation came in at 3% in August, below the 3.3% economists expected.
- Traders cut the odds of an October Fed rate hike to about 37% from nearly 51% after the data.
Background
Gold pays no interest, so it tends to fall when bond yields and the dollar rise. This year, oil has played a big role: dearer crude lifts inflation fears, which push the US Federal Reserve towards higher rates. The PCE price index is the inflation measure the Fed watches most closely.
What happened
Spot gold slipped 0.6% to settle at $4,158.70 an ounce on September 30, while US gold futures rose 0.2% to $4,189.10. Both fell 6.5% over September, snapping a two-month winning streak.
It was gold's worst month since June. The fall came in a month when Brent crude rose more than 14%.
Why gold fell
Three forces weighed on gold through the month: a firmer dollar, a deep sell-off in US Treasury bonds that pushed yields higher, and the spike in oil. Higher yields make non-yielding gold less attractive, while dearer oil feeds fears of more rate hikes.
Softer inflation data on the last day did not reverse the trend. August's PCE index rose 3.4% from a year earlier and core PCE 3%, both below forecasts. The odds of an October hike fell to about 37% from nearly 51%, according to CME FedWatch. Other data pointed to a sturdy economy: second-quarter growth was revised up to 2.2% from 1.5%, and private employers added 90,000 jobs in September, according to ADP.
What comes next
Not everyone sees inflation as beaten. Kevin Gordon of the Schwab Center for Financial Research noted that core services inflation excluding housing "is still running solidly above 3% y/y". He said there would "likely need to be more progress on that front" before the Fed could hold back.
Gold started October on a firmer footing. Spot gold rose 0.5% to $4,175.19 an ounce on Thursday, and US gold futures for December delivery gained 0.4% to $4,204.80. Traders still see a 97% chance of a rate hike by December, so the relief may be limited.
For Indian buyers, the September slide brings prices down ahead of Diwali and the wedding season. Friday's US jobs report is the next big test of whether the Fed holds off in October.
Our read
Outlook: neutral. Softer inflation has eased the near-term pressure, but yields and oil remain high. The jobs report will decide the next move.
What to watch
- The US September jobs report on Friday.
- Fed officials' comments on an October rate decision.
- Oil prices, which have driven much of September's rate-hike fears.
For information only, not investment advice.
Gold price in India
metalscost.com India reference price as of 2026-10-03.
Detailed analysis
Timeline
- 2026-09-30: Spot gold settles at $4,158.70, down 6.5% for September; US PCE inflation comes in below forecasts.
- 2026-10-01: Spot gold rises 0.5% to $4,175.19 as softer inflation data dents rate-hike bets.
Inflation
Headline PCE of 3.4% and core PCE of 3% were below forecasts but well above the Fed's 2% target.
Interest Rates
Odds of an October Fed hike fell to about 37% after softer PCE data, from nearly 51% a day earlier.
Currency Impact
A firmer dollar through September made gold more expensive for buyers outside the US.
What could lift prices
- Lower odds of an October rate hike reduce pressure on gold.
- Festive and wedding demand in India could pick up at lower prices.
What could weigh on prices
- Treasury yields and oil prices remain high.
- Core services inflation above 3% could keep the Fed hawkish.
Country impact
| Country | Impact | Reason |
|---|---|---|
| United States | High | Fed rate expectations and Treasury yields drove gold's September fall. |
| India | Medium | Lower prices arrive ahead of Diwali and the wedding season. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Gold Mining | Negative | A 6.5% monthly fall cuts miners' realised prices. |
| Jewellery | Positive | Lower prices help jewellers ahead of the festive season. |
Who gains, who loses
- Festive-season jewellery buyers in India: They face lower prices after September's 6.5% fall.
- Investors who bought near August's highs: They carry losses after the 6.5% monthly decline.
Other ways this could play out
- If the jobs report is weak, rate-hike odds could fall further and gold could recover.
- If oil keeps rising, inflation fears could push gold lower again.
Price risks
- A strong jobs report could revive October hike bets.
- A sharp drop in oil could ease inflation fears faster than expected.
Technical view
Price is trading below both its 20-period and 50-period moving averages, a bearish alignment.
Computed from metalscost.com's own stored price history.
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