Key Highlights:
- Spot gold plunged 1.1% to $4,024.22 per ounce, while US gold futures fell 0.4% to $4,035.90.
- Markets priced in an 83% possibility of a Federal Reserve rate hike in December after that central bank held rates steady.
- Stakeholders awaited US Personal Consumption Expenditures inflation data for further hints on the Fed’s monetary policy perspective.
Gold prices declined on Thursday, October 29, as stakeholders evaluated indications from the US Federal Reserve following its decision to keep interest rates unfazed. They also chose to await fresh inflation data for clues about the central bank’s upcoming move. Spot gold fell 1.1% to $4024.22 per ounce by 0618 GMT, while US gold futures for December dropped 0.4% to $4,035.90.
As per Reuters, bullion was on track for its second consecutive monthly decline as altering expectations for US interest rates weighed on the metal. Stakeholders were particularly focused on the Personal Consumption Expenditure price index, the Federal Reserve’s preferred inflation gauge, scheduled to release later in the day.
Fed Rate Perspective Weighs on Gold Prices
The latest fall in gold followed the Federal Open Market Committee’s decision to leave interest rates untouched, The Fed maintained its benchmark interest rate in the 3.75-4.00% range, while waiting for extra inflation data before making further changes to borrowing costs. As per Kelvin Wong, a senior market analyst at OANDA, the FOMC’s decision and comments from Fed Chair Kevin Warsh triggered fresh bearish positioning in early Asian trading. Traders were pricing in an 83% chance of a rate hike in December.
Higher interest rates typically put pressure on gold because the metal does not create interest revenue. When yields on interest-bearing assets rise, holding bullion becomes less appealing, potentially reducing investment demand. Investors were awaiting US PCE inflation data, due at 1230 GMT, for further indications of whether these inflationary pressures could affect the Fed’s policy decisions. The data was expected to play a crucial role in shaping market expectations for the December meeting.
Middle East Developments and Chinese Gold Demand in Radar
Geopolitical developments are a focal point on the investors’ focus. The Wall Street Journal reported on Wednesday that US Vice President JD Vance had sent a letter to Iranian Security Council chief Mohsen Rezaei in an effort to resurrect peace talks. Oil prices plunged following the report as markets evaluated the probable outcomes for Middle East supply risks.
Wong said gold could remain under pressure without a clear resolution to the Middle East rift. Geopolitical ambiguity can support demand for gold as a safe-haven asset, although its price also responds to interest-rate expectations, currency movements and wider market positioning.
Meanwhile, data from Hong Kong’s Census and Statistics Department showed that China’s net gold imports through Hong Kong rose by more than 28% in September compared with August, reaching a five-month high. The increase indicated stronger import flows through the territory, although it did not by itself establish the level of overall Chinese gold demand.
The World Gold Council’s July 2026 outlook identified investment demand, Asian buying and central-bank purchases as salient potential sources of support for the gold market during the second half of the year. However, it also advised that gold exchange-traded fund flows could remain sensitive to real yields, monetary policy expectations and movements in the US dollar. These factors help explain why bullion can face short-term selling pressure even when longer-term sources of demand remain supportive.
Other precious metals also recorded losses on Thursday. Spot silver fell 2.3% to $52.71 per ounce, platinum plunged 1.8% to $1,511.02, and palladium dropped 0.5% to $1,006.03. With investors awaiting US inflation figures and monitoring developments in monetary policy and the Middle East, gold remained sensitive to changing expectations for interest rates and demand for safe-haven assets.
