On October 26, COMEX gold stabilized near the 4,000 level and edged higher, settling at $4,031.0 per ounce, up 0.58%. Domestic SHFE gold traded sideways in the night session, closing at 865.36 yuan per gram, up 0.40%.
The pullback in oil prices was the most direct driver behind gold's ability to halt its decline and stabilize overnight. Market speculation about a de-escalation in U.S.-Iran tensions pushed energy prices lower ahead of this week's Federal Reserve meeting, partially easing the inflation anxiety that had been building. In the previous week, it was precisely the surge in oil prices that reignited inflation concerns and reinforced expectations that the Fed would keep interest rates high, which led to gold's largest weekly drop in more than four months. The marginal retreat in oil prices provided exactly the breathing window that gold needed after being oversold. However, the pressure from the interest rate side has not truly eased, and gold's rebound potential is therefore strictly constrained.
The 10-year U.S. Treasury yield remains hovering around 5%, and the dollar index has climbed to around 102. High interest rates and a strong dollar continue to systematically raise the opportunity cost of holding non-yielding assets. Gold remains highly sensitive to the transmission chain of "elevated oil prices → entrenched inflation expectations → rising rate hike expectations → higher real rates." Even if oil prices retreat in the short term, as long as rate hike expectations are not substantially weakened, gold's rebound is unlikely to gain sustained momentum. Looking ahead, this week's Federal Reserve policy meeting is the core variable affecting gold's short-term direction.
The market widely expects the October meeting to keep rates unchanged at 3.75%-4.00%. The key lies in the policy statement and the degree of hints about a December rate hike from Warsh's press conference. However, high oil prices and elevated inflation expectations are offsetting each other against slowing economic growth, leaving Fed policy effectively caught in a dilemma. This combination provides some mid-term support for gold's credit hedging and stagflation-resistant properties, but before the election window and the December meeting conclude, geopolitical risks are unlikely to generate trend-following buying and are more likely to manifest as pulse-like fluctuations.
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