Gold Price Forecast: XAU/USD Slips Toward $4,076 as December Fed Hike Odds Hit 90%

Quick overview

Quick Answer: Spot gold (XAU/USD) is trading near $4,114 in Wednesday’s European morning, October 21, down about 0.2% on the day and on track for a fourth straight loss. Traders now price roughly a 90% chance of a Fed rate hike in December, and Brent’s rebound above $110 has revived inflation worries. The level that matters is $4,076, the October floor buyers have defended twice.

My view: Bearish while gold trades below $4,149. A 4-hour close below $4,076 would open $4,031 and $3,987, while a close above $4,191 would cancel that call.

The December Fed Hike Is Weighing on Gold

Reuters reported that spot gold fell 0.2% to $4,118.18 by 0319 GMT, while US December gold futures slipped to $4,136.20, about $18 above spot. CME FedWatch data shows only about a 16% chance of a hike at the October 27 to 28 meeting, but around 90% odds of a hike in December. Nearly all economists in a Reuters poll expect the Fed to skip October and raise rates in December.

What catches my attention is Tuesday’s session. Brent fell back to $108.79 from $111.99, the 10-year Treasury yield eased about 2 basis points to 5.116% and the dollar softened, yet gold still slipped. When every short-term driver moves in gold’s favor and the price still falls, I read that as the market trading the December hike rather than daily oil headlines. That support has also faded today, with Brent back above $110 and the dollar index stabilizing.

CIBC added to the cautious tone on Tuesday. According to Kitco, the bank cut its Q4 gold forecast to $4,500 from $6,500 and its 2027 average to $5,200. Its recovery case depends on real interest rates falling below 2%, which ties gold’s next leg higher to the Fed backing away from further hikes.

ETF Investors Are Holding Their Gold

Weak prices have not triggered fund selling. Heraeus said in its latest weekly report, as reported by Kitco, that Bloomberg-tracked gold ETF holdings hit a 2026 high of 101.3mn ounces on October 8 and have stayed just above 101mn ounces since. Asian-listed funds accounted for almost half of the increase over the 12 months to September. That steady base helps explain why the decline has been a slow drift into the low $4,100s rather than a sharp flush.

What’s Next for Gold

Wednesday brings EIA crude inventories at 14:30 GMT, after the API reported a 4.9mn barrel crude draw, followed by a 20-year Treasury auction at 17:00 GMT. A weak auction that lifts yields would add pressure on gold.

Thursday’s jobless claims are due at 12:30 GMT, and Friday brings flash PMIs at 13:45 GMT and the final University of Michigan survey at 14:00 GMT. Next week’s Fed decision and PCE inflation data remain the bigger tests.

Gold Technical Analysis: Sellers Grind Toward $4,076

On the 4-hour chart, gold trades at $4,113.61, pinned beneath the descending trendline that has capped rallies since early September. Price sits below both the 50 EMA at $4,149.10 and the 200 EMA at $4,221.10, keeping the downtrend from the late-August peak intact. What catches my attention is the shrinking candle size since last week’s trendline rejection, which points to a slow grind toward support rather than a sharp flush.

The 14-period RSI reads 39.23, below its signal line at 44.38 and under the 50 midline, so momentum favors sellers without being oversold. Immediate support is $4,076.05, the floor buyers defended on October 7 and October 14, and a 4-hour close below it would expose $4,031.09, then $3,986.73.

My trade idea is bearish below $4,149, targeting $4,031 and $3,987 on a break of $4,076. A 4-hour close above $4,190.79 would cancel that view and open $4,221.10, then $4,259.99.

• Resistance: $4,149.10 | $4,190.79 | $4,221.10 | $4,259.99
• Support: $4,076.05 | $4,031.09 | $3,986.73

FAQs

Why is gold down today?

Gold is falling for a fourth straight session because markets price about a 90% chance of a December Fed hike. Brent’s rebound above $110 has added to inflation worries.

What is the key support for gold?

The key 4-hour support is $4,076, which buyers defended on October 7 and October 14. A close below it would open $4,031 and $3,987.

How will the Fed decision affect gold?

A hold on October 28 is largely priced in, so gold will react to any signal on December. A hint that the Fed could skip a December hike would support gold, while confirmation would keep pressure on prices.

Arslan Ali Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Ali Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.

His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.

His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.