Gold price holds near $4,100 after a two-month low: central banks keep buying

Gold steadied near $4,100 to $4,140 on Thursday after a Wednesday slide to a two-month low around $4,066 to $4,080, caught between a hawkish Federal Reserve and a wall of central-bank buying that keeps putting a floor under the metal.

The tug of war is straightforward. Higher yields and firmer dollar pressure a metal that pays no yield, and Wednesday's September FOMC minutes published Thursday morning did not help. All 19 officials backed the September hike, the minutes showed, and "most" judged another increase appropriate before the year ends, underpinning roughly 20% odds of a hike at the October 27-28 meeting and 78-86% by December. That is the bear case, and it did the damage on Wednesday, pushing the 10-year yield toward 5.3-5.4% and gold into its lowest session in two months.

Related reading: Central Banks Bought a Record 289 Tonnes of Gold in Q2.

Then the buyers showed up. China's central bank added 21 tonnes of gold in September, its 23rd consecutive monthly purchase, and World Gold Council data show net central-bank buying of 39 tonnes in August, 170 tonnes year to date. That structural bid met the dip near $4,065-4,080 and held it. COMEX December gold traded near $4,153 by Thursday, up 0.3%, with spot recovering from the two-month low.

The levels worth watching are tight and named. The $4,065-4,080 zone is near-term support, defined by Wednesday's session low. $4,100 is the pivot traders are watching; holding it keeps the constructive setup alive, losing it opens the slide to test the low again. Upside needs one of two things: a softer CPI print on October 14, or a fresh safe-haven bid from the conflict backdrop. Nothing in the calendar between now and CPI moves the Fed math, so this is a waiting game into the inflation report.

For the broader framework, see our gold coverage.

Related reading: Gold price sits 26% below its record, but central banks and a $5,013 forecast say the pullback is a base.

Silver is the weaker link in the complex. Spot bounced about 1% to roughly $60.4 and COMEX December silver traded near $60.65, but momentum positioning is unravelling. CFTC managed-money net length in silver collapsed about 43% week over week to just +7,614 contracts in the report for September 29, released October 2. That is a speculative unwind happening in real time even as the bounce looks firm, a sign the commodity-heavy policy path has investors trimming exposure ahead of the data.

On the bull case, the physical demand is the story that does not fade. Central-bank demand is structural, not speculative, and the conflict premium from layered supply risk adds a safe-haven bid underneath a hawkish Fed. Managed-money gold length still sits near +120,000 contracts, per CFTC data, leaving room to add on strength if CPI comes in soft or if escalation re-prices risk.

Related reading: Gold Holds Above $4,400 as Central Bank Buying Provides Support.

The bear case is the yield backdrop. A higher-for-longer Fed against a 5.3-5.4% 10-year keeps a lid on upside until one of the two triggers fires. And if $4,066 breaks with momentum already unwinding in silver, gold length at +120,000 contracts could give back in a hurry. The contrarian read is that positioning cuts both ways, and the metals stay rangebound into the CPI print rather than pick a direction early.

Watch October 14. A soft CPI gives gold the excuse to test the far side of $4,140; a hot one likely retests $4,065-4,080. Between now and then, the central-bank bid is the floor and the Fed is the ceiling.

Related reading: Gold Holds Near $4,400 as Central Banks Absorb Supply.

This content is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Consult a qualified financial advisor before making investment decisions.