Gold eased slightly today, trading around $4,110 per ounce. The metal is correcting after rising nearly 2% on Monday. Silver fell 0.8% to $52.99 after climbing almost 3% the previous day; platinum and palladium were little changed.

The main reason for Monday's gain was oil. Brent fell to $97 after trading near $116 on October 30, as the market began to expect a breakthrough in talks with Iran following the US elections. Notably, this year, gold and oil have mostly moved in opposite directions: expensive energy boosts inflation and tightens Fed policy, while cheaper oil relieves some pressure on a non-yielding asset like gold. In that dynamic, gold buyers and energy importers benefit, while oil exporters and those betting on persistent shortages lose out.

Gold is being held back by Fed policy. On Monday, Austan Goolsbee and Tom Barkin pointed to a strong economy and inflationary pressure, and Goolsbee added that the data-center boom is beginning to look like overheating demand that central banks typically respond to with tighter policy. Note that in October he still left both a hike and a pause as possibilities, so the tone has become noticeably firmer. With the funds rate at 3.75–4.00% and the CME pricing roughly a 79% chance of a December 9 hike — and October payrolls showing a 165k increase versus a 65k forecast — each such confirmation of further tightening makes gold less attractive, which is why the rally is failing to gain traction.

Dollar weakness helps. The dollar index was little changed on Tuesday after a 0.5% drop on Monday, and a cheaper dollar makes the metal more accessible to overseas buyers. However, that support is limited: when US bond yields fall along with oil, dollar pressure eases, but markets still price in more rate hikes. In the meantime, gold lacks a clear direction, so large investors are staying sidelined. As a result, short-term moves are being driven by trend strategies and physical demand.

The next key catalyst is US inflation. The market expects monthly headline CPI to slow to 0.3% from 0.6% in September, with core CPI at 0.2% after 0.3%. Speeches by Christopher Waller, Lorie Logan, Jeff Schmid, and Michelle Bowman are also on the calendar, and any hawkish comments will increase pressure on the metal. If the data come in softer than expected, gold has a chance to hold above $4,100, since the market would begin to doubt a March rate hike.

All this means gold is currently stuck between soft oil and hawkish Fed rhetoric. I think that before the inflation report is released, the metal will most likely trade around $4,100 without a clear direction, and after the report, its path will depend on the pace of price growth. If inflation exceeds expectations, I would not rule out a return to $4,000; with softer data and further oil weakness, gold could retest last week's highs.

Technical picture on gold

Buyers need to take near resistance at $4,140. That would allow a target of $4,192, above which it will be rather difficult to push. The next higher target is the $4,249 area. On a drop, bears will try to take control of $4,062. If they succeed, a breakout of that range would deliver a serious blow to long positions and drive gold down to a low of $4,001 with the prospect of reaching $3,954.