Gold's slide from this year's record highs has continued into October, with spot prices hovering between roughly $4,150 and $4,200 an ounce — more than 20% below the near-$5,590 peak the metal touched in a frantic rally on Jan. 29, according to New Straits Times, which tracked that day's surge as investors crowded into havens amid geopolitical and economic uncertainty.
The retreat has been steady rather than sudden. Prices gave back several hundred dollars within days of the January spike, then kept drifting lower through the summer as a resilient labor market and persistent inflation pushed the Federal Reserve toward a more hawkish stance than investors had priced in.
Forecasts Keep Falling
Wall Street has been chasing the move down all year. Goldman Sachs cut its year-end 2026 target to $4,900 an ounce in June, from $5,400, after concluding the Fed would deliver no further cuts this year. The bank has since trimmed that target again, to $4,650, following the Fed's September rate increase, according to InvestingLive, even as it kept a $5,400 target for the end of 2027, betting the pullback proves temporary. Goldman's analysts also lowered their forecast for inflows into gold-backed exchange-traded funds, a sign that the buying that powered the January spike has cooled alongside the price. Morgan Stanley has made a similar call, trimming its own target to $5,200 an ounce from $5,700, according to the Khaleej Times, though both banks still see room for gold to climb back toward $5,000 over time.
The driver behind both cuts is the same: a Fed under Chair Kevin Warsh that raised its benchmark rate a quarter point, to a range of 3.75% to 4.00%, in September — its first increase since 2023 — and signaled at least one more hike is likely before year-end, according to a MUFG Research recap of the decision. Higher rates raise the opportunity cost of holding a non-yielding asset like gold, and a firmer dollar has made the metal more expensive for buyers overseas. Traders are now bracing for the Fed's Oct. 27-28 meeting, where futures markets have priced in roughly a 90% probability of another quarter-point increase, which would mark the second hike of Warsh's tenure and tighten financial conditions further just as gold tries to find a floor.
Not every analyst has turned bearish, and gold remains far above where it traded before this year's rally began. But for now, the metal that set a record in January is trading like a crowded trade that has gone quiet, with its next move likely to hinge on whatever the Fed signals once that meeting wraps up.
