(Kitco News) – Gold prices have managed to hold critical support above $4,000 an ounce even as persistent inflation is pressuring some Federal Reserve officials to take aggressive steps next month. Despite the unrelenting headwinds, one bank remains optimistic that the precious metal will end the year higher.
In her latest gold market report published Tuesday, Suki Cooper, Global Head of Commodities Research at Standard Chartered, said that although higher interest rates and a stronger U.S. dollar remain significant obstacles for gold, improving investment flows and robust central bank demand are creating a solid price floor.
Despite the difficult environment, Cooper reiterated her forecast for gold prices to average $4,650 an ounce in the fourth quarter, before rising to $4,850 in the first quarter of 2027. Spot gold last traded at $4,031.80 an ounce, unchanged on the day.
Cooper said that the precious metal’s ability to hold above $4,000 an ounce, even following stronger-than-expected employment data, suggests that the market is becoming more resilient. The $4,000 level has proven fairly resilient, holding despite Tuesday’s 2% selloff following hotter-than-expected inflation data.
Standard Chartered sees $4,200 an ounce as the next significant resistance level.
The bank’s outlook comes as the latest inflation data adds to expectations that the Federal Reserve will raise interest rates again next month. The U.S. Consumer Price Index rose 0.4% in October, exceeding economists’ expectations for a 0.3% increase. Meanwhile, core inflation, which strips out volatile food and energy prices, rose 0.3%, also exceeding expectations.
Although some Federal Reserve officials have voiced support for a potential 50-basis-point move next month, Standard Chartered expects the central bank to raise interest rates by only 25 basis points in December before holding rates steady throughout 2027.
However, looking beyond the inflation threat, Cooper noted that last week’s midterm election results have also helped change the dynamics in the gold market, with the precious metal showing signs of returning to its traditional role as a hedge against economic and political uncertainty.
The bank noted that gold’s correlation with equity markets has weakened, suggesting that investors are becoming less inclined to sell their gold holdings to cover losses elsewhere.
At the same time, investors are increasingly focused on longer-term risks, including government debt, inflation and the economic implications of artificial intelligence spending.
Although speculative investors remain cautious, Cooper said that the latest positioning data suggests that $4,000 is becoming an increasingly important price floor.
Cooper said that longer-term investors continue to provide important support for the precious metal, particularly through exchange-traded products and central bank purchases.
In her report, Cooper noted that global gold-backed exchange-traded products attracted 211 tonnes of investment demand in the third quarter, their strongest quarterly performance since 2024. Inflows remained positive in October, adding another 19 tonnes despite significant market volatility.
She added that central banks are also playing a critical role in supporting prices. Official-sector gold purchases totaled 321 tonnes in the third quarter, significantly exceeding Standard Chartered’s estimate of 200 tonnes.
Standard Chartered expects central bank demand to exceed its full-year forecast, reinforcing the long-term structural support underpinning the market.
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