Gold hits 3-month low! Watch Oct 28th Fed rate decision.



• Gold now testing psychological $4,000 level for critical support

• XAUUSD+ dragged lower by oil's surge to 5-month high which raised inflation fears and Fed rate hike prospects

• Fed policy outlook remains gold's primary driver; surprise hike on Oct 28th may drag gold even lower

• Bloomberg model: 72% chance XAUUSD trades between $3900 - $4150 through Oct 30th



Today, gold briefly dipped below the $4k level to mark a 3-month low.



On Bybit's platforms, XAUUSD+ reached an intraday low of $3986.77 to mark its lowest intraday price since July 20th, before recovering back above the psychologically-important $4,000 price at the time of writing.

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To put gold's recent decline into a broader context, gold is now down:

• -28% from all-time intraday high posted on Jan 29th

• -7% so far in 2026

Gold is now also set to fall about 3.6% this week - on course for its biggest weekly drop since June.



Why is Gold falling?



Here are 3 key reasons:

• Investors scramble for cash

With stock markets tumbling, investors may have been prompted to liquidate assets and raise cash, perhaps to meet margin requirements elsewhere or just as a precautionary/safety measure.

Gold is a liquid asset, which can be easily sold and turned into cash.

• Brent oil soared to a 5-month high

This global benchmark for oil prices, as tracked by UKOUSD on Bybit's trading platforms, breached $115.50/bbl for the first time since May 5th.

Rising oil prices may keep global inflation stubbornly elevated.

• Persistent Fed rate hike expectations.

At the time of writing, markets expect at 88% chance that the Fed will raise its benchmark rates by 25-bps in December 2026.

Gold tends to fall at the thought of US interest rates moving higher.

As Bybit's Chief Market Analyst, Han Tan, shared with major media outlets including The Guardian earlier this week ...

"Gold has adhered to the downtrend that began two months ago on persistent expectations that more Fed rate hikes are in store."



Gold Outlook: What's next?



Of course, markets will be keeping a close watch on oil prices, especially if they climb another leg higher on an escalation in the Middle East conflict during the upcoming weekend.

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For the coming week, the main scheduled event for gold would have to be the FOMC meeting on Oct 27-28th, with the Fed rate decision due at 6:00PM UTC on Wed, Oct 28th.

Although markets widely expect the Fed to leave interest rates unchanged next week, one cannot fully rule out a surprise rate hike - though the odds of it happening currently stand at less than 10%.

More importantly, traders and investors will be eager for clues out of the FOMC/Fed Chair Kevin Warh's press conference about the timing of the next Fed rate hike.

POTENTIAL SCENARIOS:

• UPSIDE: Gold may rebound back to the $4150 region if the Fed backs away from more rate hikes, or delays them into 2027. Gold may also draw relief if oil prices eases back down.

• DOWNSIDE: A surprise Fed rate hike, or even another dramatic spike in oil prices, may sent Gold to the $3,900 price for psychological support.





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