Gold prices declined on Friday, even as Asian equity markets recorded sharp losses. Spot gold dropped 0.6% to $4,063.39 an ounce by early morning trading in Asia, while December futures lost 1% to reach $4,072.90.
Global markets turmoil and oil prices weigh on gold
Japan’s Nikkei 225 plummeted about 5.7% by midday, and South Korea’s KOSPI briefly slid more than 8%, highlighting the scale of the selloff in regional stocks. Despite the volatility in equities, gold failed to attract significant safe-haven demand.
During the week, gold prices remained about 4% higher overall, but the daily decline coincided with a major shift in sentiment following fresh forecasts from Wall Street.
Recent gains in the price of oil added further complications. On Friday, oil rebounded by more than 1% as investors continued to monitor supply risks in the Middle East. Analysts stated that rising energy costs can intensify inflation fears, prompting central banks like the US Federal Reserve to keep interest rates higher for longer.
Unlike government bonds, gold does not yield interest. Higher real yields increase the opportunity cost of holding bullion, while a stronger US dollar often pressures gold by making it pricier for buyers using other currencies.
Liquidity considerations may also play a role. Some market participants could be selling gold to cover losses elsewhere, though there was no widespread evidence of forced selling on Friday.
Gold’s recent weakness occurs even as hedge funds have reportedly sold gold futures for nine straight reporting weeks, increasing volatility risks for the metal.
Goldman Sachs lowers year-end gold forecast
Goldman Sachs on Thursday cut its end-2026 gold price forecast by $500 to $4,150 an ounce, a decrease of nearly 11%. The bank also lowered its 2027 target to $4,800 from $5,400, citing a more hawkish stance from the Federal Reserve.
Goldman’s revised forecasts reflect a shift toward tighter US monetary policy but do not suggest a loss of gold’s long-term investment value. Central bank buying and ongoing concerns about fiscal positions are expected to continue supporting demand.
CME FedWatch data showed traders assigned a 68% probability to a US rate hike in December. Two Federal Reserve officials expressed support this week for further increases to control persistent inflation.
According to analysts, higher rates could drive real yields upward and dampen interest in assets like gold that do not generate income. Oil price gains and sharp declines in equities may also drive near-term gold selling as investors look to reduce risk.
Despite lower targets, Goldman Sachs suggested the revised $4,150 forecast remained around 2% above recent spot prices, indicating limited room for immediate upside rather than predicting a steep decline.
US jobs report will test $4,000 support
Market focus is now on the October US employment report, due later Friday. Projections call for 65,000 new jobs, a 4.2% unemployment rate, and annual wage growth slowing to 2.9%.
A stronger set of figures could solidify expectations for another rate increase, pressuring gold through a stronger dollar and higher Treasury yields. Weaker data might offer some relief to gold prices.
Analysts suggested that lackluster jobs or wage growth could help reinforce recent rebounds in alternatives to fiat currency, such as gold and bitcoin, while robust data would likely boost the dollar and bonds.
Gold touched $4,146.63 on Thursday before retreating, with the $4,000 level providing an important psychological anchor. Near-term resistance is seen around $4,125 and the recent peak. Failure to maintain support above $4,000 could threaten gold’s recent recovery.
As gold approaches this pivotal threshold, investors closely monitor macroeconomic indicators. CryptoAppsy’s real-time charting and price alert features can assist users in staying updated on gold’s swift movements, especially around critical support and resistance levels, without the need to switch between multiple market data sources.
Federal Reserve Vice Chair Michelle Bowman is also scheduled to deliver comments later in the session, which may further influence market sentiment.
