Gold Prices Drop 4.2% as Fed Outlook and Geopolitical Risk Weigh
Gold | 2026-10-27 05:29:04
The LBMA Gold Price PM fell 4.2% week-on-week to $4,013 per ounce, taking its year-to-date decline to 8.1%.
By Paul Ploumis
SEATTLE (Scrap Monster): Gold prices witnessed a sharp weekly decline as investors shifted towards US Treasuries despite mounting geopolitical tensions and persistent inflation concerns, according to the World Gold Council’s (WGC) latest Weekly Markets Monitor.
The LBMA Gold Price PM fell 4.2% week-on-week to $4,013 per ounce, taking its year-to-date decline to 8.1%. Escalating tensions in the Middle East pushed oil prices to a six-month high, while concerns over artificial intelligence spending pressured technology stocks and weighed on global equity markets. Meanwhile, US Treasury yields dropped sharply, amidst weakness in dollar.
Global gold-backed exchange-traded funds (ETFs) recorded outflows, primarily from North America, while European investors continued adding gold amid bond market volatility. Futures net-long positions also declined, and options traders maintained a bearish near-term outlook.
Markets are focused on the US Federal Reserve’s policy meeting on Wednesday. Expectations of another rate increase have fallen below 10%, compared with approximately 70% a month earlier. Thursday’s US personal consumption expenditures inflation report, forecast to show 3.6% annual inflation, and anticipated third-quarter GDP growth of 3.2% are likely to influence rate expectations and gold’s direction.
Meanwhile, upcoming US midterm elections, Israel’s election, and uncertainty surrounding US-Iran relations could sustain market volatility and influence energy prices, inflation, and gold investment demand, WGC report said.
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What was the main reported price movement in gold during the week covered by the WGC report?
Frequently Asked Questions
- How much did gold prices decline during the week?
The LBMA Gold Price PM fell 4.2% week-on-week to $4,013 per ounce, according to the World Gold Council's Weekly Markets Monitor. The decline brought gold's year-to-date losses to 8.1%, despite continuing geopolitical tensions and inflation concerns.
- Why did gold prices fall despite heightened geopolitical risks?
Weakness in US equities and a shift toward US Treasuries weighed on gold prices. Investors appeared to favour bonds amid technology-sector volatility, while declining futures net-long positions and bearish near-term options positioning added to the pressure on gold.
- How did gold-backed ETFs perform across regions?
Global gold-backed ETFs recorded outflows, concentrated primarily in North America. In contrast, European investors continued increasing their gold holdings amid bond market volatility, highlighting diverging investment trends across the two regions.