Gold Closes at $4,021.5 After Partial Recovery From Friday’s Drop

Key Facts

Gold futures closed at $4,021.5 on October 26, partially recovering from Friday’s close of $4,007.9, after reaching $4,060.4 on October 22, according to EL7 data. The move marks a limited recovery within a broader decline during the week ended October 23. Reuters reported that spot gold rose 0.4% to $4,010.51 an ounce at 0544 GMT on Monday. The metal ended Friday down 4% for the week, its biggest weekly decline since June, after touching its lowest level since mid-July in the previous session. Markets are now focused on the Federal Reserve meeting scheduled for October 27 and 28, with the press conference expected on the second day.

S&P Global’s U.S. Purchasing Managers’ Index survey showed the preliminary composite output index falling to 57.6 points in October from 58.4 points in September. Despite the decline, the company said the reading still pointed to strong growth and estimated the annualized pace of growth equivalent to GDP at 5.0%. The figures point to resilient economic activity, but came alongside signs of sharper price pressures, making the survey broader than a simple gauge of demand or growth. S&P Global said the overall increase in prices for goods and services was the largest since August 2022. Manufacturers’ selling-price inflation also reached a pace not seen since July 2022.

Companies surveyed attributed higher input costs to oil, energy, fuel and shipping prices. Prices for raw materials, including steel, aluminum and copper, also rose because of tariffs or supply shortages in several cases. These costs keep price pressures in focus alongside signs of strong activity, as investors assess the path of U.S. interest rates. In the labor market, S&P Global said employment rose in October at its fastest pace since June 2022. The increase spanned the services and manufacturing sectors, the company said. The survey thus combines employment growth with accelerating input costs and selling prices, putting activity and inflation together at the forefront of monetary policy debate.

Gold’s move coincided with lower oil prices on Monday, after they rose to levels near their highest in about six months during the previous week. Reuters attributed the decline to hopes of easing hostilities between the United States and Iran, while continuing Houthi attacks on Saudi Arabia kept supply concerns in view. Brent crude fell 1.4% to $110.12 a barrel on Monday, after rising 3.1% to $116.72 on Friday, its highest level since June 2022. U.S. crude also fell 1.8% to $101.37. Market analyst Kyle Rodda said lower oil prices offered support to gold, but the effect could be limited as markets position themselves ahead of the Fed decision. He added that gold would move in response to interest-rate expectations and geopolitical risks.

The Federal Reserve raised its target interest-rate range by a quarter percentage point in September to 3.75%–4.00%. The central bank said in its decision that inflation remained elevated and economic activity was expanding at a strong pace. Minutes from the September meeting said data pointed to a resilient economy and persistent inflation, and that escalating geopolitical tensions had lifted energy prices. Between meetings, nominal Treasury yields rose about 35 basis points across maturities from two to 10 years, while the trade-weighted dollar declined. This backdrop remains relevant to gold, whose prices track developments in interest rates, energy and geopolitical risks, as Rodda noted. The Federal Open Market Committee is scheduled to meet on October 27 and 28, with the press conference to be held on October 28.

Markets are also watching U.S. inflation data. The Associated Press reported that the personal consumption expenditures price index, the Fed’s preferred inflation measure, was expected to show inflation rising 3.7% in September, compared with the central bank’s 2% target. The agency reported that markets expected rates to be held steady at that week’s meeting, while their expectations leaned toward another increase in December. These are expectations the agency attributed to markets; the official schedule sets the committee meeting for October 27 and 28, and the sources available here do not provide a documented forecast for its outcome. The awaited data are due ahead of the committee meeting, amid a survey reading that combines strong growth with accelerating price pressures. The Fed is scheduled to hold its press conference on October 28.