Gold fell today and again approached the $ 4,000-per-ounce mark. Silver declined 1.1% to $53.86, and platinum and palladium also slipped.

The reason for caution is clear. Tonight the Federal Reserve will announce its rate decision, and the market overwhelmingly expects a pause. Under normal circumstances, that would support gold, but traders are already pricing in hikes later this year, which offsets the effect. The chance of a hike at this meeting is under 10%, while the market already prices in a December hike. Chair Kevin Warsh faces a difficult task: he must convince investors that the Fed still intends to fight inflation, fueled by persistently high energy prices.

Oil sets the tone today. Brent rose to nearly $115 after reports that the U.S. warned Persian-Gulf countries about a possible new military campaign against Iran. That was compounded by uncertainty in Israel, where the elections are deadlocked. Remember: high oil prices work against gold along the chain of oil, inflation, and interest rates, and until that link eases, the metal will struggle to mount a sustained rally. In addition, the Fed's preferred inflation gauge — the PCE price index — will be released on Thursday. The prior August reading was 3.4% year-on-year overall and 3.0% for core PCE; any overshoot would strengthen the case for tighter policy.

Recent gold weakness was largely technical. Last week the metal fell to its lowest since mid-July as investors sold gold to cover losses elsewhere during the AI-sector sell-off. JPMorgan Private Bank says gold will find a solid bottom when rates peak, but it also warns the market remains fragile and there is little technical support below $4,000.

Demand is so far preventing a deeper collapse. Chinese households have been buying more gold on dips for the past two months because prices softened and the domestic equity market lost appeal. Physical buyers and bargain hunters helped halt the drop as the metal slipped below $4,000.

But for a sustained rally, gold clearly needs a combination of cheaper oil, softer inflation, a weaker dollar, and lower yields. None of those conditions are currently in place. I think gold will remain under pressure today and will most likely retest $4,000 again—especially if Warsh keeps a hawkish tone and confirms expectations for a December hike. A close below that level in thin liquidity could open the way to new lows, although Chinese demand is unlikely to allow a very deep breakdown. I expect a real reversal only after oil falls below $110 and yields begin to decline.

Technical picture: buyers need to take the nearest resistance at $4,062 to target $4,124, above which a breakout will be fairly difficult. The farther target is the $4,192 area. On a decline, bears will try to seize control of $4,000; if they succeed, a range break would deal a serious blow to bulls and push gold to a $3,954 low with a prospect of extending to $3,906.