The market is now pricing in roughly an 88% chance of another rate hike in December.
Gold is still trading around $4,340.
If you wanted to design an uncomfortable macro environment for gold, it would probably look a lot like this: a stronger dollar, higher interest rates, and expensive oil at the same time.
None of those factors is particularly friendly to gold in the short term.
Higher rates increase the opportunity cost of holding an asset that pays no yield. A stronger dollar usually makes gold more expensive for buyers outside the U.S. And higher energy prices can keep inflation pressures elevated for longer, making central banks more cautious about easing policy.
Yet gold is still holding above $4,300.
A further rise in yields or another leg higher in the dollar could still put pressure on the price. Short-term positioning, leverage, and changes in rate expectations can move gold very quickly.
But the interesting question is no longer simply whether higher rates are negative for gold.
It is how much damage they are actually doing.
A few years ago, an aggressive repricing toward tighter monetary policy would have been enough for many investors to expect a much deeper selloff in gold.
Today, the picture is much less straightforward.
Gold is having to absorb several traditional headwinds at once, and so far it is doing so at a historically high price.
We think that says something about the strength of the underlying demand.
The gold market is no longer driven by one simple story about when the Fed will start cutting rates. Physical demand, central-bank buying, reserve diversification, ETF flows, futures positioning, and concerns about the longer-term monetary environment are all interacting at the same time.
That creates a very different market from one in which gold depends almost entirely on falling yields.
Expensive oil adds another interesting layer.
Higher energy prices can make the inflation problem harder for central banks in the short term. That can keep rates higher for longer, which is a headwind for gold.
But persistent inflation is also one of the reasons investors want to own gold in the first place.
So the same factor can create short-term pressure through interest rates while also supporting the longer-term case for holding physical metal.
For us, the real test is not whether gold rises every day in a difficult macro environment. It is whether it can absorb bad news without giving back the broader uptrend.
Gold around $4,340 while the market prices in another December rate hike is giving us a useful signal so far.
It is not a guarantee.
It is not a prediction of the next breakout.
But it is a reminder that the gold market may be more resilient than the simple “higher rates = lower gold” model would suggest.
If the dollar remains strong, rate expectations stay elevated, and oil remains expensive, we will get an even better test.
Because a bull market looks good when everything is working in its favor.
You learn much more about it when almost nothing is.
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