Oil prices still dominate gold pricing.
2026-09-24 01:36:14
On Wednesday (September 23), the gold market opened with both crude oil prices and the Federal Reserve's moves in mind. 
Gold prices fluctuated throughout Tuesday, hovering around $4,360 per ounce. The price action resembled a yo-yo, with a slight gain at the close. The core catalyst for the macro market this week remains unchanged: initial progress in US-Iran diplomatic negotiations raises the question of whether this can effectively lower energy prices and, through the inflation transmission chain, weaken the market narrative of "high interest rates persisting in the long term." US President Trump stated that US officials and the Iranian envoy held a "very successful" three-hour meeting in New York. This rekindled faint hopes in the market that the conflict might finally see a breakthrough in diplomatic mediation. However, for gold, the key transmission path is crude oil. Gold is no longer merely traded as a geopolitical safe-haven asset; it increasingly reflects the secondary impact of energy prices on inflation, Federal Reserve policy, and the US dollar. Oil prices have already begun to play a role. Driven by news of easing tensions between the US and Iran, coupled with reports that Saudi Arabia is preparing to restart the East-West pipeline, opening a route for Saudi oil transportation around the Strait of Hormuz, WTI crude oil has fallen by more than 10% since last Tuesday's close. Every dollar drop in oil prices weakens a core logic supporting upward expectations for global interest rates. Gold prices are closely linked to crude oil prices. This correlation is the primary driver of current short-term gold price fluctuations. Rising energy prices directly push up inflation, and gold is becoming increasingly sensitive to whether inflationary pressures are persistent or temporary. If crude oil prices continue to fall, the market will begin to question whether the current interest rate hike expectations in developed markets have been overpriced; conversely, if oil prices rebound, hawkish policy narratives will regain support. This explains why gold prices sometimes surge on news of geopolitical tensions, but even if subsequent negative geopolitical news continues, gold prices weaken the following day. The market no longer trades gold simply as an indicator of fear. Currently, it is trading the chain reaction caused by oil price fluctuations. The Federal Reserve is on the other side of the equation. Last week, the Fed unanimously voted to raise interest rates for the first time in three years, and all subsequent policy statements have been generally hawkish, supporting a stronger dollar and continuously putting pressure on gold prices. Richmond Fed President Tom Barkin warned that the inflationary shock will take time to subside and there is a risk of high inflation becoming entrenched, but he did not directly signal another immediate rate hike. Thus, gold is confined to a narrow but crucial range. The decline in oil prices is a positive factor, while the strengthening dollar is a negative factor. Until traders can clearly determine whether the strength of energy deflation is sufficient to reverse the Fed's current rhetoric, gold prices will likely continue to follow every fluctuation in crude oil prices. However, deeper support is gradually forming beneath the surface. As of August, China's gold imports surged, exceeding 1,000 tons, surpassing the total import volume for the entire year of 2025. This significant increase indicates that physical gold demand is not waiting for a perfect macroeconomic environment to enter the market. The strengthening of the RMB has boosted domestic purchasing power, and domestic gold prices have remained slightly higher than international benchmark prices, with investment demand continuously absorbing market supply. As of August, domestic gold ETFs increased their holdings by approximately 44 tons, while central banks around the world continued their gold-buying momentum. In August, the People's Bank of China continued its nearly two-year record of continuous gold purchases, further boosting market sentiment. This has led to an interesting divergence in the market: macroeconomic trading is constrained by the interplay of crude oil, the dollar, and the Fed; but physical demand is quietly supporting gold prices. For traders, this is the core contradiction at present. If oil prices continue to decline, interest rate expectations will weaken accordingly, and coupled with robust Chinese demand, the macroeconomic headwinds facing gold will decrease significantly. Conversely, if US-Iran negotiations break down and oil prices surge again, inflationary pressures will return, and the Federal Reserve's interest rate hike dilemma will once again become the focus of the market. Currently, gold prices remain stable precisely because neither the bulls nor the bears have gained a decisive advantage. Crude oil, on the other hand, still holds the dominant pricing power.
Gold prices fluctuated throughout Tuesday, hovering around $4,360 per ounce. The price action resembled a yo-yo, with a slight gain at the close. The core catalyst for the macro market this week remains unchanged: initial progress in US-Iran diplomatic negotiations raises the question of whether this can effectively lower energy prices and, through the inflation transmission chain, weaken the market narrative of "high interest rates persisting in the long term." US President Trump stated that US officials and the Iranian envoy held a "very successful" three-hour meeting in New York. This rekindled faint hopes in the market that the conflict might finally see a breakthrough in diplomatic mediation. However, for gold, the key transmission path is crude oil. Gold is no longer merely traded as a geopolitical safe-haven asset; it increasingly reflects the secondary impact of energy prices on inflation, Federal Reserve policy, and the US dollar. Oil prices have already begun to play a role. Driven by news of easing tensions between the US and Iran, coupled with reports that Saudi Arabia is preparing to restart the East-West pipeline, opening a route for Saudi oil transportation around the Strait of Hormuz, WTI crude oil has fallen by more than 10% since last Tuesday's close. Every dollar drop in oil prices weakens a core logic supporting upward expectations for global interest rates. Gold prices are closely linked to crude oil prices. This correlation is the primary driver of current short-term gold price fluctuations. Rising energy prices directly push up inflation, and gold is becoming increasingly sensitive to whether inflationary pressures are persistent or temporary. If crude oil prices continue to fall, the market will begin to question whether the current interest rate hike expectations in developed markets have been overpriced; conversely, if oil prices rebound, hawkish policy narratives will regain support. This explains why gold prices sometimes surge on news of geopolitical tensions, but even if subsequent negative geopolitical news continues, gold prices weaken the following day. The market no longer trades gold simply as an indicator of fear. Currently, it is trading the chain reaction caused by oil price fluctuations. The Federal Reserve is on the other side of the equation. Last week, the Fed unanimously voted to raise interest rates for the first time in three years, and all subsequent policy statements have been generally hawkish, supporting a stronger dollar and continuously putting pressure on gold prices. Richmond Fed President Tom Barkin warned that the inflationary shock will take time to subside and there is a risk of high inflation becoming entrenched, but he did not directly signal another immediate rate hike. Thus, gold is confined to a narrow but crucial range. The decline in oil prices is a positive factor, while the strengthening dollar is a negative factor. Until traders can clearly determine whether the strength of energy deflation is sufficient to reverse the Fed's current rhetoric, gold prices will likely continue to follow every fluctuation in crude oil prices. However, deeper support is gradually forming beneath the surface. As of August, China's gold imports surged, exceeding 1,000 tons, surpassing the total import volume for the entire year of 2025. This significant increase indicates that physical gold demand is not waiting for a perfect macroeconomic environment to enter the market. The strengthening of the RMB has boosted domestic purchasing power, and domestic gold prices have remained slightly higher than international benchmark prices, with investment demand continuously absorbing market supply. As of August, domestic gold ETFs increased their holdings by approximately 44 tons, while central banks around the world continued their gold-buying momentum. In August, the People's Bank of China continued its nearly two-year record of continuous gold purchases, further boosting market sentiment. This has led to an interesting divergence in the market: macroeconomic trading is constrained by the interplay of crude oil, the dollar, and the Fed; but physical demand is quietly supporting gold prices. For traders, this is the core contradiction at present. If oil prices continue to decline, interest rate expectations will weaken accordingly, and coupled with robust Chinese demand, the macroeconomic headwinds facing gold will decrease significantly. Conversely, if US-Iran negotiations break down and oil prices surge again, inflationary pressures will return, and the Federal Reserve's interest rate hike dilemma will once again become the focus of the market. Currently, gold prices remain stable precisely because neither the bulls nor the bears have gained a decisive advantage. Crude oil, on the other hand, still holds the dominant pricing power.
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