Gold traded just below $4,000 an ounce on Monday after suffering its worst weekly decline since June, with spot bullion near $3,995 in early Asian trading. Prices briefly fell to $3,975.23 on Friday, and traders are watching whether a break below that low opens the way toward $3,900.
Instead of attracting sustained safe-haven demand, the conflict in the Middle East has created an inflation problem through energy costs. Brent crude settled at $116.72 on Friday after attacks on Saudi energy infrastructure, easing to about $114.88 on Monday but still up 6.2% for the week. Higher fuel prices reduce the Federal Reserve's room to loosen policy and raise the prospect of additional tightening. Rising yields make income-paying assets more competitive against gold, which offers no coupon or dividend.
The sell-off in AI-linked equities added pressure, as falling stocks triggered liquidity demands and forced some investors to sell gold to raise cash. Rich Checkan, president of Asset Strategies International, said he expects bargain hunters to return if Wednesday's Fed announcement delivers no unpleasant surprise. Markets widely expect the Fed to leave rates unchanged on 28 October, but traders are focused on the central bank's assessment of the oil shock and the possibility of a December hike, with futures pricing an approximately 75% probability. September's US Personal Consumption Expenditures inflation data, due Thursday, will provide the next test.
Analysts warned that a decisive loss of $4,000 could bring $3,930 into focus, while a recovery through $4,000 could signal the breakdown has failed. Traders also see potential resistance at $4,065–$4,075.
For digital-asset markets, the same macro backdrop is significant. If the Federal Reserve signals that oil-driven inflation is delaying policy easing, risk assets could face renewed headwinds from higher yields and tighter liquidity expectations.
