Gold is currently trading at around $4,000 per troy ounce, sitting just above a key support level. It has actually been a rough week for the precious metal, as bullion lost about 4%, marking its steepest weekly drop since June. However, despite ongoing geopolitical tensions and global inflation pressures, the case for a reversal and a move higher is quite strong.
So, what's holding gold back? Elevated US interest rates. With 10-year Treasury yields knocking on the 5% door, fixed-income assets are looking rather tempting. And there is a simple reason for that: since gold pays no interest, lofty returns tend to drain demand for the metal.
Oil isn't helping, either. With the conflict in the Middle East still raging, Brent crude is holding above $110 per barrel. These steep energy costs are fanning inflation fears and making it more likely that the Federal Reserve (Fed) will tighten monetary policy further.
The event to watch is the regulatory meeting on October 27–28. Most analysts see interest rates staying in the 3.75%–4.00% range. Here's the catch, though: if the American central bank strikes a hawkish tone on the future path, the dollar could firm up—and this would be even harder for gold. There is one more thing on the radar: US consumer inflation data, due Thursday. A hotter-than-expected print could spark a fresh wave of selling in the market.
Finally, let's look at the charts. On the technical side, bullion has come down to the $4,000 support after a long slide. If it holds, it could set the stage for a hike, with $4,375 per troy ounce acting as the next target.
The ultimate recommendation is to buy gold at the current price ($4,010), aiming to reach $4,375 within two weeks. To shield your position from adverse market movements, place a Stop Loss order at $3,975.
This content is for informational purposes only and is not intended to be investing advice.
