Gold Has Taken Every Punch the Fed Could Throw

Gold is likely approaching a durable floor because central-bank demand, fiscal deterioration and persistent inflation are offsetting the pressure from higher real yields and a stronger dollar.

• U.S. consumer prices rose 0.4% in October, above the 0.3% forecast, while services outside housing increased about 0.4%, implying an annual pace near 5%; markets price roughly three and a half quarter-point Fed hikes through next fall.
• The 10-year Treasury real yield reached 2.94% in October, its highest level since November 2008, and the dollar index reached a one-year high, yet gold remains near $3,880 an ounce, almost five times its level when real yields were last this high.
• Central banks bought 321 metric tons in the third quarter, up 42% year over year, bringing 2026 purchases to 675 tons; global gold funds attracted about $2.7 billion in October despite $1.8 billion of withdrawals from the largest U.S. fund.
• The U.S. fiscal deficit reached $2 trillion in fiscal 2026, or 6.2% of GDP, public debt reached 100% of GDP, and interest costs exceeded $1.1 trillion, or $225 billion more than military spending.
• Gold closed 13.7% below its 200-day moving average on October 30, the widest gap since 2013; hedge funds still held about 104,000 bullish futures contracts on November 3, unlike at the bottoms in 2015, 2018 and 2022.
• The wider market review highlights Embraer's 17% revenue growth and raised free-cash-flow forecast above $700 million, Burberry's 6% revenue growth to £1.1 billion, and pressure on Boeing, LVMH and Lucid Group.

Takeaway: The author recommends a 10% portfolio allocation to gold, split equally between physical gold and high-quality miners or funds, while warning that speculative positioning could produce one more sell-off before a durable bottom.