Gold Price Forecast: Gold Tumbles Below $3,900 as Trump Says No Need for Iran Deal; Can October PPI Spur a Rebound?

The situation in the Middle East has shifted once again recently. U.S. President Donald Trump said on Thursday that the U.S. no longer needs to reach a deal with Iran, dampening market expectations for a diplomatic resolution to the conflict. Meanwhile, Yemen's Houthi rebels claimed attacks on Saudi Arabia's East-West pipeline pumping stations and other energy facilities, while shipping security risks in the Strait of Hormuz persisted. Reignited concerns over Middle East crude supply disruptions fueled a sharp rebound in international oil prices. On Thursday, Brent crude (UKOIL) rose 3.78% to settle at $95.94, while WTI crude (USOIL) gained 2.64% to settle at $88.69.

Rising oil prices increase the risk that energy costs will further push up U.S. inflation, thereby reinforcing market expectations that the Federal Reserve will keep interest rates elevated. Previously released data showed that U.S. October CPI rose 0.4% month-over-month, topping expectations of 0.3%, while core CPI also came in above market forecasts, indicating that inflationary pressures have not yet meaningfully abated. A renewed climb in energy prices could make it harder for inflation to cool moving forward, keeping the U.S. dollar and Treasury yields strong. For non-yielding gold, higher bond yields translate into a greater opportunity cost of holding the metal, which has been a primary reason for the recent persistent decline in gold prices.

Looking ahead, the market will focus closely on today's release of the U.S. October PPI data. The market currently expects headline PPI to rise 0.4% month-over-month, down from 1.3% in September, while core PPI is forecast to increase 0.3% month-over-month. If the actual reading beats expectations—particularly if core PPI continues to show strength—markets may further raise expectations for a December rate hike by the Federal Reserve, leaving gold under continued pressure. Conversely, if PPI comes in below expectations, signaling that wholesale price pressures have eased, the U.S. dollar and Treasury yields could retreat, creating conditions for a technical rebound in gold prices.

Gold price daily chart, Source: TradingView

From gold's daily chart, the recent downtrend has accelerated noticeably. After rebounding to near $4,148 on November 9, gold prices retreated continuously, successively breaking below the $4,100, $4,000, and $3,900 marks. On Thursday, prices accelerated further downward to around $3,852, hitting a near one-year low, and the short-term downward structure has yet to show clear signs of a reversal.

Currently, gold hit a low near $3,850 on Thursday, which sits near the 0.786 Fibonacci retracement level. Prices could find short-term support here for a potential rebound, and gold's bounce in early trading today indicates that this level indeed offers some support. However, as gold broke below its October 30 low of $3,870.10, downside space has opened up, and bears still maintain the upper hand in the short term.

On the downside, initial support for gold lies near $3,850. If this level fails to hold, prices could retreat toward the $3,800 mark; if that level is breached, it will open up downside toward around $3,550.

On the upside, if today's PPI release comes in below expectations and helps gold regain its footing above $3,930, the next resistance will target $3,950-$3,970. A further breakout would make the round-number $4,000 mark a more critical technical resistance. Until gold firmly reclaims $4,000, the current rebound may remain constrained by the prior downtrend.

This content was translated using AI and reviewed for clarity. It is for informational purposes only.