Gold is slipping again in the international market and $4,000 per ounce is the support line everyone is watching. A fall below that figure could weigh further on sentiment. Yet not every force is against the metal.
Seven global triggers are pulling the metal in different directions, and a few could work in its favour. Here are the factors weighing on gold, which could push prices to fresh highs.
1. Brent above $115 is bad news for gold
The US-Iran war sits at the centre of most pricing worries across financial assets. Gold has not been spared.
Oil traded near $70 per barrel before the war disrupted supplies through the Strait of Hormuz. Now it is around $116. That is more than 60% above pre-war levels. Even a July dip back to the pre-war level did not last.
The impact of volatile oil prices is visible on the yellow metal. Gold is down 25% from pre-war levels and 28% from its peak of $5,602 on 29 January 2026.
Why investors cannot ignore it: Oil feeds inflation, and inflation feeds rate hike bets. A sharp move in oil, in either direction, can swing gold prices quickly.
2. Is gold still an inflation hedge?
Gold is seen as the best bet against inflation. But there is a catch. When inflation rises, central banks raise interest rates to cool it.
History shows that gold has outperformed inflation by 5-6% over the long run. In the short to medium term, though, other factors also influence gold prices.
So where does that leave gold today? Not in a comfortable spot. US inflation remains sticky and is running above 3%, and the forces behind the price surge are still active. US annual inflation rose more than expected in September to 3.7% from 3.4% in August.
Higher inflation raises the odds of more Fed rate hikes, which push up Treasury yields and the dollar index, making non-yielding gold less attractive.
Inflation might be here to stay if International Monetary Fund (IMF) numbers hold. In a recent report, the IMF expects global inflation to increase to 4.7% this year from 4.1% in 2025, before easing back to 4.1% in 2027.
If inflation spikes further and stays higher through 2027, gold could regain its role as an inflation hedge, but only if real yields stop rising.
Why investors cannot ignore it: This trigger decides which story gold follows. If rate hikes win, gold falls. If bond yields ease, despite rising inflation, the hedge case returns.
3. More Fed rate hikes are priced in
US Fed rate hikes are negative for gold. The Fed did not raise rates for about three years, but in September, it hiked them by 25 basis points to 3.75%-4.00%, and more hikes are expected. A higher-rate scenario is mostly a headwind for gold. The rule is simple: higher interest rates strengthen the dollar and make yield-bearing assets more attractive, so money moves out of gold, which pays no interest.
So where does that leave gold today? The markets expect rates to remain unchanged in October, but a 25-bps hike is expected at December’s Federal Open Market Committee (FOMC) meeting.
Why investors cannot ignore it: The US Fed’s FOMC meeting tone moves gold faster than most triggers. Any hint around the Fed’s future rate campaign can shift prices quickly
4. Bond yields near 5% are a threat to gold
US Treasury bond yields have climbed to levels not seen in decades. Here is why: Investors have been selling bonds, pushing prices lower and sending yields higher. It is not restricted to the US. Bond yields in many other developed nations, such as Japan, the UK and Germany, are also at multi-year highs.
The bigger question is why investors are shunning US government bonds globally. There are two main reasons. First, investors expect interest rates to stay higher, mainly because global inflation does not look set to ease anytime soon. Second, the US fiscal burden makes investors demand a higher term premium to hold long-duration government bonds.
If inflation keeps rising, rates will continue to go up, and that pushes yields higher. In early October, the 10-year Treasury yield hit a high of 5.31%, and the 30-year Treasury yield touched a high of 5.67%.
As of today, bond yields have eased a bit as money from a sell-off in the equity market flowed into safer bonds, with investors shedding AI stocks.
It may still be too early to say that bond yields have reversed direction. Unless yields ease for the same reasons that drove them higher in the first place, it is premature to expect a sustained boost for gold.
Why investors cannot ignore it: Yields are gold’s closest rival. When a safe government bond pays close to 5%, a metal that pays nothing must work harder to attract an investor’s money.
5. Central banks are still buying, but slower
Central banks kick-started gold’s recent bull run in October 2023 with a buying spree rarely seen before. Central Banks worldwide bought nearly 1,000 tonnes of gold annually over the past three years, well above their historical average. This sustained demand helped push gold prices to record highs.
In 2026, central banks continue to buy gold, though at a slower pace. Even this reduced buying appears to be providing enough support to keep prices around $4,000 an ounce.
Why investors cannot ignore it: Central banks are gold’s biggest steady buyers. Slower buying could weaken the floor under prices. A pickup could strengthen it.
6. Geopolitics is shaping demand and supply
One of the primary reasons central banks add gold to their reserves is geopolitical events that lead to economic uncertainty. Recent gold sales by two countries show how financial pressures can force central banks to tap their reserves.Turkey sold gold to help stabilise the lira, while Russia drew on its gold reserves amid fiscal pressure from war spending and sanctions.
Geopolitical uncertainty usually lifts gold. If geopolitical tensions escalate sharply, gold could find renewed support as investors seek safe-haven assets.
Why investors cannot ignore it: Geopolitics cuts both ways. It can add demand through safe-haven buying, and it can add supply when countries sell gold under pressure.
7. A stronger dollar makes gold dearer
In the international market, gold is priced in dollars. A stronger dollar makes it more expensive for holders of other currencies. That is the story in 2026. The Dollar Index hit an 18-month high near 102.50 earlier this month and remains a headwind for gold until it weakens. The 2025 numbers support this strongly: the Dollar Index fell nearly 12%, while gold surged 65% as the greenback weakened.
Why investors cannot ignore it: The dollar is the other side of the gold trade. Any weakness in the dollar index could signal that gold’s biggest headwind is easing.
Bottomline
Gold sits near $4,000 with these triggers acting on it. Oil, rate hikes, bond yields, and a strong dollar are weighing on prices. Central bank buying and geopolitics are providing support. Inflation could go either way. The next big move depends on which side gets stronger. The main triggers to watch: Oil prices and the Fed’s December rate stance
Article written by Sunil Dhawan
Source: Financial Express
Disclaimer: This article is intended for informational purposes only and should not be construed as investment advice, financial guidance, or a recommendation to buy or sell any asset.
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