Gold Gains in Spite of Dollar Strength, as Crude Oil Falls

Gold recovered from earlier losses today, gaining $15.20, or 0.35%, on Tuesday. Overseas traders took the metal beneath its 50-day moving average early in the session, reaching a low of $4,327 before consistent buying brought it back to close out the day at $4,396.20, just a tick below its 100-day moving average.

Gold's advance was aided by falling oil prices. At the time of writing (6:20 PM ET), WTI crude oil futures had just broken beneath the $90 mark, entering territory not seen since the 1st of this month, though prices remain above every level seen in August, at $89.76. The decline followed a statement from Saudi officials indicating they are close to reopening the “East-West” oil pipeline.

One of the more bullish headlines of the day came out of China, where fresh trade data showed the country's official gold reserves reached a record valuation of $350.08 billion at the end of August 2026, driven by a continuous 22-month buying streak by the People's Bank of China. China spent a record $158.8 billion importing more than 1,000 tonnes of gold in the first eight months of 2026, and the pace out of the world's largest gold market keeps accelerating, with roughly 23 tonnes added in August alone — China's largest monthly reserve addition since October 2023.

The odds of an October rate hike stand at 54%, according to the CME's FedWatch tool, little changed from yesterday but nudged slightly higher after two Fed officials voiced support for additional tightening. Yet the growing influence of central bank gold buying globally is keeping the metal firm even as the Federal Reserve, under Chair Kevin Warsh, leans less accommodative. That is a big reason gold has managed to hold above its 50-day moving average despite inflation concerns: central banks represent a source of demand that stays consistent regardless of rising rates or an elevated yield on US bonds.

Another reason gold may be shrugging off a tighter perceived monetary policy is that investors are paying closer attention to fiscal policy than to monetary policy. Gross federal debt crossed $40 trillion on August 18th, up from $39 trillion just five months earlier in March, and the fiscal 2026 deficit stood at $1.97 trillion through August with one month still to go. Interest expense on that debt has climbed to a record $1.4 trillion on a trailing-twelve-month basis, up roughly 12% year-over-year, and has now overtaken defense spending as one of Washington's largest single budget items. That dynamic is self-reinforcing: higher rates raise the government's own borrowing costs, which widens the deficit and forces even more Treasury issuance into a market that has to absorb it. For gold, this fiscal backdrop matters more than any single rate decision, because it points toward a structural currency debasement that no single pause or hike from the Fed can fully offset.

Technically, gold's bounce off $4,327 respected the rising 50-day moving average almost to the dollar, reaffirming the uptrend that has carried the metal higher since summer. The 100-day moving average, sitting just overhead of today's close, is now the level to watch: a confirmed close above it would open the door toward the $4,500 mark, while a rejection here would likely keep gold consolidating between the two moving averages a while longer. Momentum readings remain far from overbought, leaving room to run in either direction. As with most things in these markets, the pattern is the message — capital, like water, tends to follow the path that fiscal and monetary policy carve for it, and lately that path keeps bending back toward gold.

Wishing you as always, good trading,