Gold steadies near $3,995 ahead Fed decision

Spot gold started Fed decision week trading on the defensive around $3,995 an ounce in early Asian dealings, close to its lowest level since July. The metal had ended last week at about $3,996, marking its first close below $4,000 since mid-July after a weekly loss of 4%. December US gold futures settled at $4,007.90 per ounce. The decline left bullion heading into the Federal Reserve’s upcoming policy meeting near key psychological and technical levels.

During Friday’s session, spot prices slipped 0.6% to $3,998.35 by late morning in New York, briefly touching an intraday low of $3,975.23 before ending the day just under $4,000. The 4% weekly fall was the steepest in more than four months. Despite this sharp pullback, weekend trading saw prices largely steady around the same area rather than extending losses.

Higher energy prices have been a central driver of the recent move, with Brent crude (UKOUSD) rising sharply amid renewed Middle East supply concerns. The oil rally has fueled inflation worries and reinforced expectations that US interest rates may need to stay restrictive for longer. There is a 90.6% probability the Fed will leave rates unchanged at the upcoming meeting and a 79.4% probability of a rate increase in December.

Higher interest rates typically weigh on non-yielding assets such as gold by making interest-bearing alternatives more attractive. Strategists note that gold has come under renewed selling pressure, at one point falling more than 2.5% in a single session, even as broader markets were unsettled by a global technology stock selloff. Margin calls linked to equity declines have also prompted some investors to liquidate gold and silver (XAGUSD:N) positions.

Analysts highlight that gold has continued to weaken even as US Treasury yields have recently fallen and geopolitical risks have remained elevated. This combination suggests fragile near-term sentiment for the metal. Some commentators argue that a sustained easing in oil prices and further declines in real yields could help stabilize gold, but they signal caution until prices show a more resilient response.

Technical levels are in focus as traders assess whether last week’s slide will extend or pause. Reference levels include support around $3,963 and $3,946, with a deeper bearish marker near $3,890.

The broader macro calendar may add volatility, with the Federal Reserve decision due this week and the US Personal Consumption Expenditures inflation report scheduled for later in the week. These events could reshape expectations for the December meeting and beyond, influencing gold’s appeal as an inflation hedge and safe-haven asset.

In the physical market, lower international prices have encouraged buying in India, where demand improved during the Dussehra festival and premiums widened. In China, physical offtake was steady, although consumers remained cautious on jewellery purchases.