December gold futures on the New York Mercantile Exchange’s COMEX division closed regular trading on October 28 at $4,073.72 an ounce, down $0.88 (0.02%) from the previous business day. Despite the modest pullback, the intraday range spanned roughly $46, from $4,038.30 to $4,084.10, as the market was whipsawed by shifting views on Middle East tensions.
What pushed the market lower was the rise in U.S. interest rates and dollar buying that accompanied higher crude oil. Concerns that the U.S. might carry out a short, concentrated military operation against Iran after the midterm elections drove crude prices up. Long-term yields rose through renewed inflation pressure, eroding the relative appeal of gold, an asset that pays no interest. The dollar was also bought in currency markets, making dollar-denominated gold appear relatively expensive.
The decline, however, did not proceed in one direction. Crude oil’s advance paused after Iranian Foreign Minister Araghchi again signaled a willingness toward a diplomatic solution. Then, when the Federal Open Market Committee (FOMC) decided to hold policy rates steady as the market expected, dollar buying retreated and gold pared its losses. In after-hours trading following the close of regular trading, gold was trading mainly around $4,079.
On the previous day, October 27, gold futures had risen $36.10 (0.89%) to $4,074.50, extending their gains. Although long-term yields rose after U.S. economic indicators, including September durable goods orders and the October consumer confidence index, all beat expectations, expectations for a diplomatic resolution to the Iran conflict pushed crude below $100 a barrel, giving gold the upper hand.
The correlation with crude oil has become pronounced. December WTI crude futures on the New York Mercantile Exchange (NYMEX) rebounded on October 28, rising $1.81 (1.81%) to $101.71 a barrel from the previous business day. Reports that the U.S. warned Gulf states to prepare for a post-midterm military operation rekindled concerns about supply tightness. Crude was bought up to $103.55 during the session before the gains narrowed on the Iranian foreign minister’s remarks.
Financial markets are currently experiencing unstable price action as they weigh two factors: geopolitical risk and monetary policy. After gold hit a high of $4,699 in August, it has recently dipped below $4,000 at times, and the near-term focus is on whether support at the lower end holds.
| Indicator | Latest Level/Move |
|---|---|
| COMEX December gold settlement | $4,073.72 (down $0.88 from previous day) |
| Same trading range | $4,038.30–$4,084.10 |
| WTI December crude settlement | $101.71 (up $1.81 from previous day) |
| Policy rate | Held steady (as market expected) |
Note: Prices are regular-trading settlements as of October 28. The gold trading range includes after-hours trading.
Market participants’ attention is focused on how long the crude oil rally will last. If supply concerns intensify again, both interest rates and the dollar are likely to rise, capping gold’s upside. On the other hand, if diplomatic efforts advance, gold is likely to attract buying through lower crude prices and falling interest rates. With a single remark about Iran capable of changing the market’s direction, volatile price action is expected to continue for the time being.
Japanese domestic gold prices could also be affected. If both dollar-denominated gold prices and exchange rates swing, the impact would extend to Japanese retail store prices and the benchmark prices of investment products. For holders of precious-metals mutual funds and ETFs, the course of Middle East tensions and U.S. monetary policy will remain key factors in their decisions.