Gold prices declined on Thursday, October 29, as stronger-than-expected U.S. economic growth and persistent inflation pressures reinforced expectations of another Federal Reserve interest rate hike before the end of 2026.
The precious metal came under selling pressure despite modest gains during the previous three trading sessions. Meanwhile, investors assessed fresh U.S. GDP and inflation figures alongside uncertainty surrounding monetary policy and global financial markets.
At 10:05 ET, spot gold fell 1.1% to $4,025.99 per ounce, while gold futures declined 0.4% to $4,035.77 per ounce.
Gold Price Falls as US Economic Data Strengthens Rate Hike Expectations
The latest decline in gold prices followed the release of several important U.S. economic indicators that highlighted the resilience of the American economy.
Stronger economic activity, combined with elevated inflation, increased expectations that the Federal Reserve could raise borrowing costs at its December policy meeting.
Higher interest rates generally create challenges for gold because the precious metal does not generate interest income.
Consequently, rising bond yields can make interest-bearing investments more attractive compared with non-yielding assets such as bullion.
However, gold also responds to geopolitical uncertainty, currency movements, and investor demand for safe-haven assets.
US GDP Growth Beats Forecasts at 3.4%
The U.S. economy expanded faster than expected during the third quarter of 2026, according to the latest Bureau of Economic Analysis (BEA) report.
Gross domestic product (GDP) increased at an annualized rate of 3.4% between July and September, exceeding economists’ consensus forecast of 3.2%.
The reading also represented a notable acceleration from the second quarter’s 2.2% growth rate.
Continued investment in artificial intelligence infrastructure and resilient consumer spending helped support economic activity despite higher energy prices and international trade tensions.
The stronger-than-anticipated GDP figures suggested that the economy remained capable of expanding even as borrowing costs stayed elevated.
As a result, investors increasingly considered the possibility that the Federal Reserve could maintain tighter monetary conditions for longer.
US PCE Inflation Rises to 3.6% in September
Alongside the GDP report, the latest Personal Consumption Expenditures (PCE) inflation figures showed that consumer price pressures remained elevated.
The headline PCE Price Index increased 0.5% month over month in September, accelerating from August’s 0.3% increase.
On an annual basis, headline PCE inflation climbed to 3.6%, compared with 3.4% in the previous month.
Meanwhile, the Core PCE Price Index, which excludes volatile food and energy costs, rose 0.3% on a monthly basis.
Annual core inflation reached 3.1%, remaining above the Federal Reserve’s long-term 2% target.
Although the readings matched market expectations, the acceleration in headline inflation highlighted the challenges facing policymakers.
Rising gasoline and energy costs also contributed to higher consumer prices, reflecting ongoing pressure from geopolitical developments and disruptions in global energy markets.
Federal Reserve December Rate Hike Remains in Focus
The latest inflation and economic growth figures followed the Federal Reserve’s decision to leave interest rates unchanged at its October meeting.
The Federal Open Market Committee (FOMC) maintained the benchmark federal funds rate within the 3.75%–4.00% range.
Nevertheless, financial markets continued anticipating another interest rate increase at the central bank’s December 8–9 meeting.
Federal Reserve Chair Kevin Warsh acknowledged the strength of the U.S. economy while emphasizing that inflation remained elevated.
However, he indicated that policymakers did not broadly consider the economy to be overheating.
The central bank therefore faces the challenge of controlling inflation without unnecessarily weakening economic growth.
For gold investors, the direction of Federal Reserve policy remains particularly important because higher interest rates can increase the opportunity cost of holding precious metals.
AI Stock Market Volatility Adds Pressure to Gold
Gold prices also faced uncertainty as investors evaluated the sustainability of massive artificial intelligence investments.
Recent volatility in technology stocks raised concerns about corporate spending on data centers, advanced semiconductors, and supporting infrastructure.
In some cases, sharp equity market declines can prompt investors to sell gold holdings to raise cash or cover losses elsewhere in their portfolios.
This selling pressure can temporarily weaken gold prices even when broader financial uncertainty would normally support demand for safe-haven assets.
The latest pullback followed an earlier decline that pushed bullion toward its lowest level since July.
Furthermore, gold remained on course for a second consecutive monthly decline, reflecting the difficult short-term environment for precious metals.
Central Bank Gold Purchases Provide Long-Term Support
Despite recent weakness, continued gold purchases by global central banks remained an important source of underlying demand.
According to Goldman Sachs estimates, central banks purchased approximately 79 tonnes of gold in August.
That figure was considerably higher than the average monthly buying pace of approximately 17 tonnes recorded before 2022.
China accounted for an estimated 25 tonnes of the total, making it the largest identifiable buyer during the period.
However, these figures represent Goldman Sachs’ estimates rather than confirmed official purchase totals.
Central banks have increasingly viewed gold as a tool for diversifying foreign exchange reserves and reducing exposure to geopolitical and financial risks.
Rick Kanda, managing director of The Gold Bullion Company, suggested that persistent central bank demand could help support bullion prices over the longer term.
Nevertheless, gold’s performance will continue to depend on multiple factors, including interest rates, investor confidence, currency fluctuations, and geopolitical developments.
US Dollar Stability Influences Gold Market Outlook
The U.S. dollar also remained an important factor influencing gold prices.
The U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, was relatively unchanged at approximately 102.22 during the reported session.
However, the index had gained around 0.6% over the preceding week.
A stronger dollar can place downward pressure on gold because the precious metal becomes more expensive for buyers using other currencies.
Conversely, a weaker dollar can improve gold’s affordability for international investors and potentially support demand.
Therefore, currency market developments will remain closely connected to the precious metal’s near-term performance.
Gold Price Outlook: Can Bullion Stabilize Above $4,000?
Overall, gold prices remained under pressure as stronger U.S. economic growth and elevated inflation reinforced expectations of additional Federal Reserve monetary tightening.
The decline toward $4,025 per ounce highlighted the market’s sensitivity to interest rate expectations and broader financial conditions.
However, sustained central bank purchases and geopolitical uncertainty could continue providing longer-term support for the precious metal.
Looking ahead, investors will closely monitor Federal Reserve statements, inflation reports, Treasury yields, and movements in the U.S. dollar.
The $4,000 price area could also attract additional attention as traders assess whether gold can stabilize following its recent losses.
For now, the balance between higher interest rate expectations and persistent safe-haven demand will likely remain a major influence on the gold market.
