Gold prices have declined sharply; what should investors watch next?

        In late September 2026, global gold prices fell below the USD 4,200 per ounce level, declining by USD259 per ounce, or 5.8%, to USD4,110.55 per ounce, which is their lowest level since early August 2026. Meanwhile, domestic gold bar prices in Thailand dropped below THB66,000 per baht-weight, falling by THB3,850 per baht-weight, or 5.5%, in line with the decline in global gold prices. However, Thai gold prices declined at a slightly slower pace than global gold prices, partly due to the depreciation of the baht, which helped cushion downward pressure on domestic gold prices.
Key factors weighing on gold prices in recent months include persistently high energy prices driven by conflicts in the Middle East, which have added inflationary pressures. This has prompted central banks to maintain tight monetary policies, particularly the US Federal Reserve (Fed), which raised its policy rate at its September meeting. Rising inflation and the Fed's tighter monetary policy stance have also pushed US Treasury yields significantly higher, placing additional pressure on gold, a non-yielding asset.
        Looking ahead, investors should monitor four key factors that could determine the direction of global gold prices: developments in the Middle East, bond yield movements (particularly US Treasury yields), signals from the Fed, and US economic and inflation data. According to the Bloomberg Consensus survey conducted in September, analysts expect global gold prices to recover to approximately USD4,465 per ounce by the end of 2026. However, this outlook remains highly dependent on the evolution of these key factors.
        If tensions in the Middle East ease or an agreement is reached, energy price pressures and inflation risks could diminish, leading to lower US Treasury yields. Under such circumstances, the Fed may not need to accelerate interest-rate hikes or raise rates beyond what is currently reflected in the Dot Plot. Combined with moderating inflation and a softening labor market, these developments could support a recovery in gold prices in line with Bloomberg Consensus expectations.
        ​Conversely, if conflicts in the Middle East intensify or negotiations fail, energy prices and inflationary pressures could increase further, driving bond yields higher. If inflation accelerates while the US labor market remains resilient, the Fed may be compelled to continue raising interest rates or maintain a more restrictive monetary stance than currently indicated in the Dot Plot, creating additional headwinds for gold prices.
        ​KResearch believes that the recovery potential of gold prices remains limited amid the continuing tensions in the Middle East. Persistently elevated energy prices are likely to keep inflationary pressures from easing significantly, which may require the Fed to maintain a tighter monetary policy for longer than investors currently anticipate. As a result, gold prices are expected to remain highly volatile in the near term. Moreover, movements in domestic gold prices are not determined solely by global gold prices. The recent depreciation of the baht has helped offset part of the decline in global gold prices. Therefore, market participants should monitor both global gold price trends and exchange-rate movements in tandem.

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