Gold Prices Drop as Oil Spikes and Rate Hikes Loom

Gold prices declined approximately 4% to $3,996 per ounce during the week ending October 23, 2026. The downturn followed attacks on energy infrastructure in Saudi Arabia, which pushed up global crude oil prices and raised concerns that energy-driven inflation would compel the Federal Reserve System to maintain high interest rates.

Market expectations shifted toward further tightening, with the CME FedWatch Tool indicating an 84% probability of a rate hike in December. Other precious metals, including silver, platinum, and palladium, also weakened. Because gold is a non-yielding asset, rising US Treasury yields increase the opportunity cost for investors.

Analysts at JPMorgan Private Bank warn that gold faces continued downside risk due to thin liquidity and projected monetary tightening. The bank expects the Federal Reserve to implement rate hikes in December 2026 and again in the first quarter of 2027, potentially pushing 10-year Treasury yields to between 5.25% and 5.5% by mid-2027. Yuxuan Tang of JPMorgan Private Bank noted that the metal will only find a solid bottom once interest rates peak.