Gold slipped below the $4,000 level at the start of Friday's session as persistent inflation and elevated real yields weighed on prices, putting the critical $3,950 support level at risk, according to FXEmpire senior analyst Christopher Lewis. Traders entered the session with fresh inflation data in focus. According to the U.S.
Bureau of Economic Analysis (BEA), September PCE prices rose 0.5% month over month and 3.6% from a year earlier in the United States. Excluding food and energy, prices increased 0.3% monthly and 3.1% annually. Lewis argues that the release reinforces the need to distinguish between an inflation concern and an automatic bullish signal for gold.
Persistent price pressure can encourage demand for purchasing-power protection, but that protection can wane. Inflation can also lead investors to expect tighter policy for longer, which increases the appeal of competing interest-bearing assets. In his view, the balance between these effects matters more than the inflation headline itself.
The policy backdrop is also relevant. The Federal Reserve maintained its target range of 3.75% to 4% at its October 28 meeting, with two dissenters preferring a quarter-point increase. Lewis notes that an unchanged target does not establish that the next move will be a cut, and traders are betting on an interest-rate hike in December.
A separate BEA GDP release estimated third-quarter PCE inflation at 2.1% annualized and core PCE inflation at 2.5%. Lewis cautions that these quarterly rates are calculated differently from September's year-over-year readings, and that a slower quarterly average and firm inflation at the end of the quarter can coexist. Real yields provided some counterweight on Thursday.
According to the source, the 10-year Treasury real par yield fell to 2.63% from 2.67% on October 28, and U.S. Treasury real yields declined again on October 29, with the 10-year yield easing to 2.63%. In principle, lower real yields reduce the opportunity cost of holding gold, which pays no interest.
However, the source stresses that the relationship is not mechanical: currency conditions, liquidity preferences, positioning, and demand for defensive exposure can outweigh it. CME's preliminary October 29 bulletin recorded December 2026 COMEX gold settling at $4,031.40 per ounce, down $20.20. A daily gold futures chart cited in the article shows prices at $3,978.2, below the $4,000 support and beneath the $4,200 resistance level.
From a technical standpoint, Lewis says the market appears to be threatening a serious breakdown. The next support sits at $3,950, and a significant drop could follow if yields remain elevated. He adds that gold needs evidence that underlying price pressure is moderating without a severe deterioration in economic activity.
A less constructive scenario would involve continued inflation persistence combined with a renewed expectation of restrictive policy. Lewis also points to the third-quarter Employment Cost Index, due at 8:30 a.m. that day, as a small piece of the broader picture rather than a decisive catalyst. Lewis advises caution against buying into the decline, describing attempts to catch a falling knife on Friday as potentially unwise.
He states that below $3,950 he becomes much more bearish. Source: FXEmpire, "Gold Price Forecast – Gold Drops Below $4000," by Christopher Lewis. Data as cited in the article from the BEA, the Federal Reserve, the U.S.
Treasury, and CME Group.
Source: fxempire.com