Most of the media focus today will be the Federal Reserve decision, with lower real yields providing a supportive financial backdrop ahead of the announcement. The decision is scheduled for 2 p.m. Eastern, followed by a 2:30 p.m. press conference.
CME’s closing price yesterday lists the December 2026 COMEX gold settlement price at $4,074.60, up $36.20. The price confirms a higher settlement, which has been the case most of the week.
Par Yield
The Treasury’s 10-year par yield fell to 2.64% yesterday from 2.66% Monday. It was 2.88% on October 13. The chart below plots every observation over that interval, showing that the easing has included reversals rather than a straight decline.
The lower inflation-adjusted government returns reduce one important opportunity cost of holding gold. An investor choosing a non-interest-bearing asset gives up less competing real income when those yields decline. This doesn’t necessarily create a fixed relationship. Both can move independently, but it is one factor to keep in the back of your mind.
Inflation Backdrop
The inflation backdrop helps explain why communication by the Federal Reserve will matter so much today. September CPI, released on October 14, increased 0.6% month-over-month after seasonal adjustment and 3.7% over 12 months before adjustment. Core CPI rose 0.3% monthly and 2.6% annually.
The September PPI release, published on October 15, showed final demand prices up 1.3% monthly and 6.3% annually. The measure excluding food, energy, and trade services rose 0.5% for the month. These measures describe producer prices and aren’t necessarily passed on to consumers, and are not necessarily passed through to the Federal Reserve’s preferred PCE inflation measure.
Gold Price Forecast
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See all Gold forecastsFor gold, the question will be whether or not inflation concern changes expected policy and real returns. A message from the Federal Reserve emphasizing persistent price pressure could keep financial conditions somewhat restrictive, as it could have traders thinking that the Federal Reserve is going to tighten monetary policy.
Positioning Is Another Useful Input for Pricing at the Moment
The latest CFTC futures snapshot as of October 20 records managed money gold longs of 120,970 contracts against shorts of 16,764. The calculated net long at that point is 104,206 contracts. The existing long exposure can amplify reactions when communication challenges the prevailing investment scenario.
A supportive message may encourage investors to maintain positions, while a restrictive surprise from the Federal Reserve could prompt reductions, therefore kicking off a bit of a short squeeze.
Advanced GDP
Thursday has the BEA advance third-quarter GDP and September personal income and outlays, including PCE inflation, scheduled for 8:30 a.m. Eastern. These will test whether growth and price pressures reinforce the policy message delivered today.
Currency conditions can add a separate problem. A firmer dollar can make dollar-priced bullion more expensive for buyers using other currencies, while a weaker dollar can ease that cost. The effect is somewhat conditional on local demand and investor priorities as well.
For Wednesday, continued easing in real yields would reinforce the holding-cost argument for bullish behavior. A sustained reversal higher would weaken it, especially if accompanied by firmer expectations for restrictive policy by the Federal Reserve.
Technical Setup
As things stand right now, the technical analysis for gold does look well supported, with the $4,000 level being an area that a lot of traders will be watching very closely. A buy-the-dip mentality exists, but a breach below the $3,950 level could send the bulls running. I see a certain amount of resistance just waiting at the $4,200 level.