In early Asian trading on Monday, spot gold traded around $3,990, extending the more than 2.5% decline from the prior session and repeatedly testing below the $4,000 psychological level.
The core conflict for gold right now is this: geopolitical escalation should traditionally be a positive for the metal, but this round of conflict is hitting the energy side first, and the resulting inflation and tightening expectations have instead become headwinds for gold. This combination of geopolitical support being offset by interest rate headwinds explains why gold has fallen rather than risen during the current Middle East tensions, dropping to a new low since July.
Among the suppressing factors, oil prices are the most direct transmission channel. WTI crude rose to a more than five-month high, with Brent strengthening in tandem, after Houthi attacks on Saudi Arabia raised concerns about further disruptions to energy supply. OCBC strategists noted that gold "faced renewed selling pressure overnight, falling more than 2.5%," while "Brent crude surged on renewed Middle East supply concerns, intensifying inflation worries and expectations that the Federal Reserve may need to keep rates higher for longer," thereby weighing on the metal.
The logic of this chain is very clear: rising oil prices push up cost-side inflation readings, which in turn strengthens the case for central banks to keep rates high; since gold pays no yield, a higher central tendency for real rates directly raises the cost of holding it, making interest-bearing assets relatively more attractive. Compared with previous geopolitical episodes, the pricing focus of this conflict has landed on the inflation side rather than the safe-haven side, which is the fundamental reason gold has failed to replicate its past safe-haven performance.
Even more alarming is the pattern of gold's reaction. OCBC specifically pointed out that "even as US Treasury yields fell sharply, gold continued to weaken," stressing that "neither lower yields nor rising geopolitical uncertainty was enough to support gold prices, suggesting recent market sentiment remains fragile." This observation carries key signal value: in the traditional pricing framework, falling yields and the outbreak of risk events usually constitute a double support for gold; when both conditions are met simultaneously and gold still declines, it shows that the dominant force has shifted from marginal positives to passive selling at the positioning and sentiment level. Combined with heavy CTA selling, it is clear that the current decline is driven more by programmatic selling and the unwinding of leveraged longs than by a fundamental repricing. Such selling is characterized by speed and weak elasticity: once the key psychological level is breached, it easily triggers the next round of stop-losses, but after panic is released, a technical rebound also becomes more likely.
Policy expectations, meanwhile, are limiting rebound potential from the other side. Although traders see a small probability of a 25 basis point hike at next week's policy meeting, higher oil prices have prompted the market to increase bets on another rate hike in December. According to the CME FedWatch tool, the market is currently pricing about a 79.4% probability of a Fed rate hike in December, with about a 90.6% probability of keeping rates unchanged at this month's meeting. Fed Chair Warsh's recent remarks scored 5.6/10, slightly below the historical average of 6.1/10, with a relatively mild but still cautious tone; he admitted he is "too scarred by the trauma of the global financial crisis," emphasized an investment surge driven by "good policy," and remained alert to uncertainty over AI's employment impact, while refusing to prejudge the decisions in October and December. The FXS Fed sentiment index held unchanged at a high level of 127.51, indicating the overall policy narrative remains firmly in hawkish territory.
For gold, this is an environment of "no short-term catalyst, medium-term headwinds": standing pat next week is already widely expected, making it hard to provide incremental positives; but the year-end tightening path has not been disproven, making any rebound vulnerable to selling pressure at relatively low levels. The most uncertain variable remains geopolitics itself. Trump said over the weekend that it is "time to make a decision" on whether to reach a deal with Tehran or resume strikes, while threats against Americans by Iran and the Houthis continue to increase. This intermediate state of "keeping the door open to talks while holding military options in hand" is precisely the scenario that is hardest to price for gold: it is neither enough to disprove the risk of supply disruption nor able to provide a clear path to de-escalation, ultimately leaving gold caught in the middle—unable to attract pure safe-haven buying while also unable to escape inflation-driven tightening concerns. Only when this situation moves toward one end will the pricing focus for gold likely become clear again.
Institutional views further confirm the current cautious stance. OCBC said, "Given gold's lack of positive response to the recent pullback in yields, we remain cautious in the near term," noting that "a pullback in oil prices and a further decline in real yields could help gold stabilize," but stressing that "we will not turn more optimistic in the near term until we see a better price response." From a cross-asset perspective, the current volatility in gold is essentially the superposition of four threads: first, active suppression from surging oil prices through the inflation and interest rate channels; second, passive selling pressure caused by outflows from programmatic funds such as CTAs; third, a valuation ceiling formed by the Fed's year-end rate hike path not being disproven; and fourth, a pricing failure as geopolitical conditions have not translated into effective safe-haven buying. In addition, silver falling below $54 to a new low since November 2025, with the gold-silver ratio being pushed higher passively, further confirms that the market's pricing focus remains on the rate side rather than the inflation side. Investors should not view gold's one-sided move in isolation, but should assess it within the transmission chain of "oil prices—inflation—real rates—exchange rates": only when real rates or the dollar index loosen materially will a阶段性 low in gold become credible.
On the daily chart, spot gold is trading below the 100-day simple moving average and the 20-day Bollinger middle band, with the price below the lower Bollinger band. After the recent break below the channel, downside pressure is significant and the short-term bias is bearish; RSI (14) stands at 34.13, hovering not far above oversold territory, indicating that selling pressure still dominates but the indicator is nearing overextension, a classic "bearish trend, approaching oversold" pattern that argues for waiting for confirmation signals rather than blindly chasing shorts. On the upside, resistance is watched in sequence at the lower Bollinger band around $4,015, the 20-day Bollinger middle band around $4,130, and a broad supply zone formed by the 100-day moving average around $4,220 and the upper Bollinger band around $4,240. Only a daily close effectively above $4,015 would ease the current bearish bias and open room for an attack on $4,130. On the downside, support is first seen at the previous support of $3,980, followed by the psychological levels of $3,950 and $3,900, with $4,000 being the key recent psychological dividing line; a sustained close below it could open space toward $3,950 or even $3,900.
On the 4-hour chart, gold has drifted lower along short-term moving averages after retreating from around $4,020, with the MACD histogram expanding below the zero line and the fast and slow lines diverging downward, showing that short-term bears hold the advantage; once $3,980 is breached on volume, gold may seek support at $3,950 or even $3,900; an upside breakout requires a decline in oil prices and lower real rates, and until then a range-trading approach is appropriate to avoid chasing rallies or selling into declines.
In summary, gold's key short-term conflict lies in surging oil prices rekindling inflation and Fed tightening concerns, compounded by CTA outflows and technical breakdown pressure, while RSI nearing oversold and the defense of the $4,000 level provide a buffer; these two-way drivers make it more likely that gold will consolidate within the $3,980–$4,015 range and wait for a confirmed breakout. Three variables should be watched closely going forward: first, the direction of Brent and WTI crude and conditions in the Strait of Hormuz, which are the preconditions determining inflation expectations and real rate direction; second, Trump's "decision moment" remarks on Iran and Iran's retaliatory moves, as any substantive escalation or de-escalation could reprice gold through both the safe-haven and oil-price channels; and third, the Fed's meeting outcome this month and confirmation of the December path, together with US inflation data and the dollar index, which will be the key criteria for year-end holding costs.
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