For logistical reasons, I have to reach for my electronic quill on Wednesday afternoon this week instead of at the usual time on Thursday. For days, and until around 2 p.m. today, I had been very much looking forward to finally reporting week-over-week rising gold prices here again. After all, it is somewhat frustrating to have recently reported mostly on falling prices instead of finally spreading some joy again. But please remember once more: I am only the messenger … and not responsible for today’s price setback.
Bond markets: Calmer conditions support gold price
The week actually started well for gold. Toward the end of last week, gold prices had already stabilized somewhat and turned their gaze northward. The reason was that the recently very strong price swings in the bond markets subsided and yields retreated somewhat from their highs. On Monday, US bond markets were closed for Columbus Day, so gold prices only moderately retreated from the weekly high reached overnight into Monday. On Tuesday and until Wednesday noon as well, gold quotes held around 1 to 2 percent above their level from last Thursday. Then what was not supposed to happen happened: Consumer price inflation came in at 3.7 percent in September, above market expectations. Core inflation, which excludes energy and food prices, also slightly exceeded the market consensus.
US inflation: Fed rate hike back in play
It happened as it had to: Interest rate futures markets had recently deemed a potential Fed rate hike on October 28 unlikely and had therefore priced it out heavily. After the release of the inflation data, they priced in a probability of roughly 50 percent. Yields on two-year US Treasuries jumped 0.10 percentage points. And the US dollar appreciated about 0.7 percent against the euro to its highest level since May 2025. The broad US dollar index from Bloomberg also rose to an eleven-month high. Gold prices then more or less slammed on the brakes:
Gold price: Pullback after weekly high
Last Thursday morning, they were still trading at around US$4,125 per ounce. After rising to US$4,195 per ounce at the end of the week, the weekly high mentioned above of about US$4,217 per ounce was reached overnight into Monday. As recently as Wednesday noon, the precious metal traded at US$4,150 per ounce, before depreciating to US$4,080 per ounce after the release of the inflation data. At 4:30 p.m. on Wednesday afternoon, gold is trading at US$4,095 per ounce.
Xetra-Gold: Weaker euro supports price
Due to the weaker euro against the US dollar, the Xetra-Gold price is trading slightly above the prior-week level as of this writing – at least there’s that. During regular trading hours, it initially rose from €118.20 per gram last Thursday morning to about €120.35 per gram at the weekly close on Friday. The weekly high of €120.85 per gram was reached on Tuesday at the market open. After the US inflation data, it moved lower to the weekly low so far of exactly €118.00 per gram, or to currently €118.40 per gram on Wednesday at 4:30 p.m.
Outlook: Real interest rates and producer prices in focus
The focus is now shifting back to Fed monetary policy. The US producer price data due for release on Thursday of this week could trigger further strong market moves. It may be cold comfort, but various market analyses have recently pointed out that the gold price is remarkably resilient in the current environment of unusually high real interest rates (that is, nominal interest rates on bonds minus the expected inflation rate). Various model calculations indicate that, in this environment, the gold price should be trading below US$3,000 per ounce. Gold supporters can therefore hope that real interest rates will fall again in the medium term, which could give gold prices a decent boost.
I wish all readers a pleasant weekend and an enjoyable fall.