Gold Breaks Below $4,000 as Oil Rally Revives Fed Hike Bets

Gold fell 1,687 pips this week, from $4,165.62 to $3,996.91, and closed below $4,000 for the first time since July. Oil drove most of the move. Crude kept climbing on Middle East supply fears, which raised inflation worries and firmed up bets that the Federal Reserve raises rates again.

How the week unfolded

Monday started well. Gold rose early after remarks from Kevin Warsh cut back bets on an October hike, and softer oil helped. The gains faded as oil moved up to May highs and US Treasury yields rebounded. Gold closed the day 293 pips lower.

Tuesday took off another 161 pips. Oil reached a five-month high, gold fell for a third straight session, and talk of further Fed tightening grew louder. Later in the day, diplomacy over the Strait of Hormuz knocked oil prices back down. Yields dropped too, yet gold still failed to rally.

Wednesday was the only up day, at +106 pips. Gold first slipped to around $4,110, then bounced back above $4,130 once oil eased and yields steadied. Ten-year real yields fell to 2.77%.

Thursday did most of the damage, with a fall of 1,033 pips. Attacks around Hormuz and on Saudi targets sent crude higher, and gold dropped more than 1% early in the session. It then slid through $4,100 and $4,070 to a three-month low, giving back its whole summer rally to test $4,000.

On Friday gold went below $4,000, recovered a little from the three-month low, then sold off again. It finished 306 pips down on the day, with oil at $114. The week's high was $4,184.56 and the low $3,991.91 (hourly closes). Silver fell to its lowest level of the year.

What else moved gold

Rates and yields. Fed rate expectations were the most-covered topic after gold itself. Oil pushed up the inflation outlook, which kept hike bets alive and held real yields high. That raises the cost of holding a metal that pays no interest. US data added to the pressure: weekly jobless claims fell to a three-month low and the S&P PMI showed healthy business activity. Weak housing numbers did little to help. Housing starts fell 5.2% and pending home sales dropped 7.3%, but gold barely reacted.

The dollar. The US Dollar Index slipped below 102.00 and later held near 101.70. A weaker dollar normally supports gold, but it did not this week. Gold fell alongside the dollar, which became a story in its own right.

Haven demand. Gold failed to act as a safe haven this week. On Thursday, investors seeking safety bought US Treasuries instead of gold, even as yields fell. On Friday, gold dropped below $4,000 as part of a wider market sell-off. Nerves over AI and tech stocks, including another slide in Asian tech shares, came with bouts of volatility rather than support for gold.

Physical and investor demand. Demand data and price action pointed in different directions. Gold ETF holdings reached their highest level of 2026. Investors moved $500 million into a cheaper SPDR gold fund. The digital gold market tripled to $55bn. In India, festive buying lifted demand and local gold moved to a premium. The Royal Mint reported renewed gold demand, and central banks were said to be buying about four times more gold than usual. Against that, Russia sold 6.2 tonnes in September, taking its reserves to the lowest since 2019, and Bridgewater China cut its gold holdings.

What the coverage is focused on now

By Friday, the news centred on oil, Hormuz tensions and what an energy-driven inflation spike means for the Fed's decision next week. Gold's drop below $4,000 drew a lot of attention: headlines asked why the haven trade broke down and whether the sell-off had gone too far. Analysts disagreed on where support might be found.

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Important

For analysis purposes only. This describes last week's gold news and what gold did; it is not financial advice or a recommendation to trade. The news is no guide to where gold goes next. Trading carries a high risk of losing money.