Gold Must Hold $3,886 Support to Avoid Deeper Decline, Says Standard Chartered Analyst

Gold slipped below $4,000 last week, prompting analysts to watch the metal’s technical support level closely. Suki Cooper, Global Head of Commodities Research at Standard Chartered Bank, said the market must hold the $3,886 per ounce level; a sustained break could trigger a deeper correction.

Cooper noted that global gold-backed exchange-traded products (ETPs) experienced renewed outflows, ending a period of relatively resilient demand. > "Notably, the sell-off extended beyond gold across assets, reflecting tech jitters and liquidity needs to meet margin calls or generate cash," she said.

She added that elevated energy prices are keeping inflation pressures high, which may force investors to reassess expectations for U.S. monetary policy. > "Crucially, gold will need to establish a floor as higher oil prices keep inflation risks in focus and the potential for further rate tightening weighs on the metal,"

Despite near-term risks, Standard Chartered projects an average gold price of $4,650 an ounce in the fourth quarter and $4,850 in the first quarter of 2027. The bank’s outlook persists even as markets price a high probability of a Federal Reserve rate hike later in the year.

The U.S. 10-year Treasury yield has fallen to around 4.97%, but the decline has offered limited support for gold, with investors remaining focused on inflation and possible further tightening. The U.S. dollar continues to act as a headwind, with gold’s three-month rolling correlation to the dollar at negative 47%.

Investment positioning suggests the market may be nearing a bottom. Speculative investors have reduced gold exposure for eight straight weeks, and global ETP holdings fell by 1.3 tonnes last week, pushing at least 350 tonnes into loss-making territory. Some short-covering activity, however, hints that investors are seeking a price floor.

Physical demand from Asia could provide support. Cooper highlighted India’s upcoming Diwali festival on November 8 as a potential catalyst after a weak start to the seasonal market, noting that September imports fell 83% year-over-year. In contrast, China’s September imports rose 34% year-over-year, reaching a three-month high.

Cooper concluded that while the longer-term view on gold remains positive, the metal could continue testing the floor in the coming weeks if oil prices rise and inflation expectations stay elevated.