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Below the Perspective on Gold Mr. Saish Sawant - Research Analyst-Commodities, Emkay Global Financial Services

Gold heads for worst week in four months, tests psychological $4,000 mark

“Gold is heading for its steepest weekly decline in four months, down over 3.5% and holding above $4,000/oz after briefly slipping below that level for the first time since 29 July. Cross-asset deleveraging has driven the move, as a sharp correction in US equities pushed investors to sell liquid holdings such as gold to meet margin calls.

Macro headwinds are compounding the pressure. Brent has climbed to a five-month high of $114/bbl after renewed Houthi attacks in Saudi Arabia, reinforcing inflation concerns. Markets expect the Federal Reserve to hold rates at its 27-28 October meeting but price roughly an 80% chance of a December hike, which raises the opportunity cost of holding non-yielding assets.

The US dollar and Treasury yields remain elevated and continue to weigh on bullion, although both have dipped this week. The dollar index is near 101.5, close to a three-week low, while the 10-year yield has fallen to a one-month low as the equity sell-off drove safe-haven demand for Treasuries, even as gold was sold for liquidity. Bullion is now about 20% below its level at the onset of the US-Iran conflict in late February.

The near-term trend remains bearish, and persistent selling risks a retest of the $3,940 swing low. Doubts over AI-led growth are already trimming rate expectations, which should provide support over time once the liquidation fades.

Next week’s PCE data, the Fed’s preferred inflation gauge, is the main near-term catalyst alongside the FOMC meeting. A hot reading would reinforce December hike pricing and extend the pressure, while a softer print would ease the rate burden. We maintain a bearish stance until a dovish pivot or relief in energy prices emerges.”

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