Gold fell below $4,000 an ounce on Friday, its lowest since July, after hotter US inflation and stronger growth raised expectations of a Federal Reserve rate rise in December. Attacks on shipping near the Strait of Hormuz also pushed oil prices higher.
At a glance
- US PCE inflation rose to 3.6% a year in September from 3.4% in August.
- The US economy grew at a 3.4% annualised rate in the third quarter, above the 3.1% expected.
- MCX gold futures fell about 1% to Rs 1,41,181 per 10 grams ahead of Diwali.
Background
Gold pays no interest, so expectations of higher interest rates make it less attractive than bonds. The Federal Reserve kept rates at 3.75% to 4% on Wednesday, but two officials voted for a rise. Personal consumption expenditures (PCE) inflation is the Fed's preferred gauge of price pressure.
What happened
Spot gold slipped below $4,000 an ounce on Friday and traded near $3,958.80 in early US trading, down 1.3%, Kitco reported. Earlier it touched its lowest level since July 17, according to Reuters, as gold headed for a second straight monthly fall.
In India, MCX gold futures for December fell 0.99% to Rs 1,41,181 per 10 grams, Livemint reported.
Why prices fell
US data on Thursday showed the economy grew at a 3.4% annualised rate in the third quarter, faster than the 3.1% expected. September PCE inflation rose to 3.6% a year from 3.4%, and core PCE rose to 3.1% from 3.0%.
Stronger growth and stickier inflation make a December Fed hike more likely, which weighs on gold. Renewed attacks on commercial shipping in the Strait of Hormuz also pushed crude oil higher, adding to inflation worries.
What it means
Gold and silver are heading for monthly falls of more than 4% and 16%, said Kaynat Chainwala of Kotak Neo. A sell-off in technology shares may also be pushing investors to sell metals to cover losses, she said.
Not everyone is bearish. UBS analyst Giovanni Staunovo told Reuters gold could reach $5,000 or more next year, once the Fed eventually cuts rates again.
Our read
Outlook: bearish. Hotter inflation and strong growth have raised the odds of a December Fed hike, a confirmed driver of gold's fall below $4,000.
What to watch
- Further US inflation data before the Fed's December 8-9 meeting.
- Oil prices and shipping risks around the Strait of Hormuz.
- Indian buying as prices fall before Diwali.
For information only, not investment advice.
Gold price in India
metalscost.com India reference price as of 2026-11-01.
Detailed analysis
Timeline
- 2026-10-28: The Fed holds rates at 3.75-4% in a 10-2 vote.
- 2026-10-29: US data show 3.4% third-quarter growth and 3.6% PCE inflation.
- 2026-10-30: Gold falls below $4,000 to its lowest since July 17.
Inflation
US PCE inflation rose to 3.6% a year in September, and core PCE to 3.1%.
Interest Rates
Strong growth and sticky inflation have raised expectations of a December Fed rate rise.
Geopolitical Risks
Attacks on shipping near the Strait of Hormuz pushed oil prices higher.
What could lift prices
- UBS sees gold reaching $5,000 or more next year once rates are cut.
- Lower prices could draw Indian buying before Diwali.
What could weigh on prices
- A December Fed hike looks more likely after hot inflation data.
- Investors are favouring US Treasuries as their safe haven, Kotak Neo said.
Country impact
| Country | Impact | Reason |
|---|---|---|
| United States | High | Inflation and growth data are driving expectations of another rate rise. |
| India | Medium | MCX gold fell about 1% days before the Diwali buying season. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Jewellery | Positive | Lower prices could help jewellery buying before Diwali. |
Who gains, who loses
- Gold buyers in India: Prices are lower ahead of the festive season.
- Gold investors: Gold is heading for a second monthly loss of more than 4%.
Other ways this could play out
- If the Fed raises rates in December, gold could fall further below $4,000.
- If inflation cools, gold could recover as hike expectations fade.
Price risks
- A ceasefire or calmer shipping could ease oil prices and support gold.
- Further tech-share selling could force more metal sales.
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.
United States
India