Gold fell again today for objective reasons. Escalation in the Middle East raises inflation risks ahead of the Federal Reserve meeting. Spot trades now at $4,091.47 per ounce; intraday the decline reached 1.2% down to $4,066. That move erased the previous day's moderate gain. Silver is down 2.7% at about $56.41, and platinum and palladium are losing more than 2%.

Oil remains the main factor. It rose above $110 a barrel after deadly attacks in Saudi Arabia that heightened supply concerns from the region. The U.S. ordered the evacuation of some embassy staff and their families from the kingdom. Rising real yields on U.S. bonds also add pressure on gold, since the metal pays no interest.

Recall that since last Friday, traders have had almost no fresh Fed cues: comments from Fed chair Kevin Warsh did not change expectations that the Fed will hold rates at next week's meeting. Weak housing data — notably a drop in housing starts and record-low pending home sales — support that scenario. The probability of a 25-bp hike is now less than one in six, but rising oil prices could change that. Traders currently expect another hike in December, yet inflation remains well above the 2% target, and high energy prices increase the chance the Fed will need to tighten policy further.

All this means gold now depends less on safe-haven demand and more on rate expectations. As long as oil stays above $110 and markets price in a December hike, pressure on the metal will persist.

As for the technical picture, buyers need to take the nearest resistance at $4,124. That would allow targeting $4,192, above which a breakout will be fairly difficult. The far target is the $4,249 area. In a decline, bears will try to seize control of $4,062. If that succeeds, a breakout above the range will deal a serious blow to bulls and push gold toward a $4,047 low, with the prospect of extending to $4,021.