Gold falls to new year-to-date lows amid Fed rate-hike expectations
Gold slipped to its lowest level since November 2025 as markets priced in a likely December Federal Reserve rate increase, leaving the metal on track for a monthly decline.
Gold (XAU/USD) fell to around $3,944 on Friday, its lowest level since November 2025, as investors priced in expectations of another Federal Reserve rate hike in December. The decline comes despite a broader risk-off environment, with traders shifting to government bonds and the U.S. dollar briefly easing before recovering.
The U.S. dollar index hovered near 101.90 after touching an intraday low of 101.59, while West Texas Intermediate crude rose above $103 a barrel, driven by concerns over possible renewed U.S. military action against Iran ahead of the midterm elections. Higher energy prices could keep inflation above the Fed’s 2% target, reinforcing expectations of tighter monetary policy.
Data released on Thursday showed September headline personal consumption expenditures (PCE) inflation up 0.5% month-over-month and 3.6% year-over-year, with the core measure rising 0.3% month-over-month and 3.1% year-over-year. The CME FedWatch Tool indicates a roughly 75% probability of a December rate increase.
Analysts at ING noted that comments from Fed officials Thomas Barkin, Mary Daly and Alberto Musalem are unlikely to shift market expectations, as pricing already reflects a December hike. They added that AI-related market concerns and the upcoming U.S. midterms are adding downside pressure to the dollar.
Technical analysis shows gold trading below its 50-day, 100-day and 200-day moving averages, with the relative strength index near 34 and the MACD in negative territory, indicating continued selling pressure. Immediate support is seen at $3,950, with a break below could open the path to further declines.