Gold has pulled back slightly to $4,331.29 per ounce today, but is confidently heading for a weekly decline of 2.2 percent. The metal lost 1.8 percent the previous day. Silver rose 0.1 percent to $63.64 after a 5.5 percent collapse on Thursday, its worst day since June. Platinum and palladium gained.

The decline stems from two sources, and both should have supported the metal. Thursday's data showed the US producer price index rose 0.4 percent month-on-month, the largest since May, while Brent rose almost to $108 per barrel as Iran and the US entrench for a prolonged war. Neither inflation nor military escalation helped gold.

Renewed price pressure, partially caused by higher energy costs, intensified fears that inflation may prove more persistent. The paradox that now defines the metal's entire dynamic lies in this linkage. War pushes oil higher, oil accelerates inflation, inflation raises the odds of Federal Reserve tightening, and tightening hits a non-yielding asset. Geopolitical risk, which has worked for gold for centuries, now works against it, and three consecutive weeks of declines confirm this.

The second blow came from the debt market and deserves separate attention. Yields jumped after the US Treasury bought fewer bonds than expected in its first expanded operation. This cast doubt on the effectiveness of Scott Bessent's unconventional intervention designed to stabilize the market and restrain a spike in long-term yields.

A reasonable question arises: why did the Treasury's failure not play out in favor of the metal through the devaluation narrative? I am convinced the answer is the time horizon: in August similar doubts about Washington's ability to manage debt pushed gold up nearly 15 percent, whereas now the market reacts to a nearer, more tangible factor — the Fed meeting on September 15–16. The rate channel works faster than the narrative. Moreover, the Treasury's promises and purchase volumes fell short of market expectations.

I expect the balance of forces to swing in favor of the metal after the September meeting, and here is why. Swaps price in about a 70 percent probability of a hike — the decision is largely priced in — but the consequences for the debt market, with ten-year yields around 5 percent, the market has not yet fully digested. I tend to think the hike itself will be the turning point for gold by the sell-on-the-rumor, buy-on-the-fact logic. The risk to this forecast lies in Kevin Warsh's rhetoric: if he signals not a one-off step but the start of a full cycle, the metal will fall below $4,200 and a third week of declines will turn into a fifth.

As for the current technical picture for gold, buyers need to take the nearest resistance at $4,372. That will allow a target of $4,425, above which a breakout will be difficult. The farthest target is the $4,480 area. In a decline, bears will try to seize control of $4,304. If they succeed, a range breakout will deliver a serious blow to bulls' positions and push Gold toward the $4,249 low, with a prospect of extending to $4,200.