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Gold Struggles Near $4,000 Despite Falling Yields and Softer Dollar
Gold prices struggled to sustain a recovery following the Federal Reserve's October 28 decision to hold interest rates steady. Despite declining Treasury yields and a softer U.S. dollar, bullion remained under pressure as unusual market correlations raised questions about short-term investor demand.
By Paul Ploumis
Published: October 29, 2026
Market analysis: October 28–29, 2026
Key Points
- Gold: Struggles to sustain gains near the $4,000/oz support level.
- Federal Reserve: Rates held at 3.75%–4.00% following a 10–2 policy vote.
- Market correlations: Five-session gold correlations reached +0.85 with Treasury yields and +0.59 with the dollar index.
- Market uncertainty: Month-end positioning and possible forced selling may be affecting bullion demand.
SEATTLE (Scrap Monster): Gold remained under pressure following the Federal Reserve's October 28 policy decision, despite falling U.S. Treasury yields and a weakening dollar, conditions that would ordinarily provide support to the non-yielding precious metal.
The Federal Open Market Committee voted 10–2 to maintain its benchmark interest-rate range at 3.75%–4.00%. Federal Reserve Chair Kevin Warsh acknowledged persistent inflation but pointed to improving inflation expectations and financial conditions.
FOREX.com analyst David Scutt questioned whether the central bank's policy stance was sufficiently restrictive to restore price stability, particularly after September's rate increase.
Gold's Traditional Relationship With Yields and Dollar Shifts
Gold recovered modestly during Wednesday's session, but the rebound was weaker than might normally be expected given declining Treasury yields and dollar softness.
According to Scutt's analysis using LSEG data, gold recorded a five-session correlation of +0.85 with daily changes in U.S. 10-year Treasury yields and +0.59 with the dollar index.
The relationship with Treasury yields was also positive over 20 sessions at +0.24, compared with a negative correlation of −0.19 over 60 sessions.
These readings indicate an unusual short-term pattern in which gold has been moving alongside markets it has historically tended to move against.
ScrapMonster Edge: Falling Yields Are Not Guaranteeing Higher Gold Prices
Gold typically benefits when Treasury yields decline because the opportunity cost of holding a non-interest-bearing asset falls.
However, the latest five-session correlation of +0.85 with 10-year Treasury yield changes indicates that this relationship has temporarily shifted.
Market significance: The reversal suggests traditional interest-rate signals alone may not explain gold's recent performance. Short-term correlations can change quickly and do not establish the cause of price movements.
$4,000 Remains a Critical Gold Price Level
Scutt identified possible month-end portfolio adjustments, forced liquidation in other markets and tighter dollar liquidity as factors that could be limiting gold's recovery. However, the available evidence does not establish which factor is responsible.
The analyst also noted that his financial conditions proxy, at −0.690, remained in accommodative territory despite becoming less supportive over recent months.
For now, $4,000 per troy ounce remains the principal support level under examination. Gold's ability to hold that area will be important in assessing whether the recent weakness stabilizes or extends further.
Courtesy: www.forex.com