Gold eked out a slight gain Thursday as a Treasury bond rally offset a surge in oil and the dollar, while renewed U.S.-Iran tensions kept energy prices elevated. Bank of America, meanwhile, kept its bullish long-term gold forecast but warned that oil could drag prices below $4,000 before a 2027 rebound.
Spot gold added 0.5% to settle at $4,177.25/oz on Thursday, while gold futures inched up 0.1% to $4,207.55/oz. A rally in U.S. Treasury bonds offset a jump in the dollar to a nearly one-and-a-half-year high, which otherwise capped the metal's gains alongside a surge in oil.
Gold just posted its worst month since June
Gold fell more than 6% in September, its steepest monthly drop since June, after the Fed raised interest rates for the first time since 2023 and signaled further tightening could follow. Rising global bond yields during the month also lifted the opportunity cost of holding an asset that pays no interest, though the 10-year yield eased 6.5 basis points to 5.246% on Thursday. Friday's nonfarm payrolls report is now the next test for Fed rate-hike bets, after data this week showed resilient growth and cooling inflation.
Oil surges as U.S. prepares to resume strikes on Iran
Oil also rose sharply, capping gold's gains: Brent crude futures expiring in December climbed 4.3% to $102.21 a barrel. The advance followed a Wall Street Journal report that the U.S. is sending a third aircraft-carrier strike group and additional Marine Corps ships to the Middle East, adding 9,000 to 10,000 troops to the region by the end of November.
President Donald Trump said he expects to resume strikes on Iran that same month. According to Investing.com, "They'll either sign a very fair deal, or they won't exist any longer," Trump told reporters Thursday.
BofA sees downside risk below $4,000 before a 2027 rebound
Bank of America kept its forecast for gold to average $5,000 in the second and third quarters of 2027, but set a $4,000 average for Q4 2026, with a risk of prices falling toward $3,750. Since oil topped $90 a barrel on August 20, gold has fallen about 8% as oil, the dollar and yields all rose, the bank said in a note dated September 30.
A $150 oil spike, not BofA's base case, could cut the bank's 2027 average forecast to about $3,500. The bank also flagged that central banks, led by Turkey, sold about 60 tonnes of gold in the second quarter, a pattern it warned could resume. Investment demand currently supports prices only around $4,000, the bank estimates.
Sources: Investing.com, InvestingLive
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