Gold Faces Pressure

 

Gold prices remained under bearish pressure below the US$4,150 level during the early European session, with sellers targeting the two-month low near US$4,100 touched the previous day. The US Dollar attracted fresh buying interest after Tuesday’s corrective decline, emerging as the key factor weighing on Gold prices as traders await the Federal Reserve’s FOMC meeting minutes for fresh policy signals.

The price action seen since the beginning of last week can be classified as a bearish consolidation phase against the backdrop of a decline from August’s monthly swing high. Gold is also trading below the 100-period Simple Moving Average (SMA) and the 61.8% Fibonacci retracement level on the 4-hour chart, reinforcing the bearish technical outlook.

Meanwhile, the Moving Average Convergence Divergence (MACD) remains in positive territory at 3.35, suggesting moderate bullish momentum. However, the Relative Strength Index (RSI) stands at 44.26 and is edging lower, indicating that any recovery remains vulnerable while Gold prices stay below the key resistance levels.

Nevertheless, traders may want to wait for a decisive break and sustained acceptance below US$4,100 before anticipating another leg lower. The level represents both the lower boundary of the current trading range and the 78.6% Fibonacci retracement. A sustained decline below this area could expose the next major structural support near US$3,938.

On the upside, immediate resistance is located at the 61.8% Fibonacci retracement near US$4,228, followed by the 100-period SMA at US$4,248 and the 50% Fibonacci retracement at US$4,317. A sustained move above this cluster of resistance levels would be required to ease the current bearish bias.

Fed Rate-Hike Expectations Shift Toward December

US macroeconomic data released last week showed easing inflation and some cooling in the labor market, reducing pressure on the Federal Reserve to raise interest rates. However, the CME Group FedWatch Tool indicates that traders are pricing in roughly an 85% probability of a rate hike by the US central bank in December.

As a result, the upcoming FOMC minutes will be closely watched for clues about the Federal Reserve’s future interest-rate path and monetary policy outlook. Any indication of further rate hikes could have a significant impact on the US Dollar and non-yielding Gold.

Strategists at BNY Markets emphasized that the market repricing away from a Federal Reserve move in October does not necessarily signal a material shift in the central bank’s near-term policy trajectory. They noted that the probability of a December rate hike has not declined significantly and now expect a second rate increase in the current cycle to take place toward the end of the year.

Looking further ahead to 2027, BNY Markets warned that the outlook has become increasingly uncertain, particularly because the ongoing conflict in the Middle East remains difficult to predict. Developments in the region could have significant implications for oil prices and create supply-side inflationary pressures.

Geopolitical Risks Support Dollar

Ahead of the FOMC minutes, persistent geopolitical uncertainty and renewed gains in US Treasury yields have helped revive demand for the US Dollar as a safe-haven asset.

In the latest developments surrounding the Middle East crisis, Yemen’s internationally recognized government forces, backed by Saudi Arabia, claimed control of strategic positions along the Red Sea coast, including areas near the Bab al-Mandeb Strait. Meanwhile, Iran-backed Houthi forces responded by targeting key locations in Saudi Arabia, including an Aramco refinery in Riyadh.

Iran has also intensified its attacks around the Strait of Hormuz over the past week, helping crude oil prices extend their recovery from a one-month low reached overnight. Rising energy prices have fueled concerns over inflationary pressures, keeping US Treasury yields elevated near multi-year highs.

Higher yields and renewed demand for the US Dollar have created additional headwinds for XAU/USD, putting further pressure on Gold prices.

At the same time, China’s central bank continued its gold-buying streak for the 23rd consecutive month. However, the ongoing purchases have provided only limited support for Gold amid the broader bearish fundamental backdrop.

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Gold Gains

 

Gold prices rose on Tuesday as falling oil prices eased concerns over energy-driven inflation and reduced expectations that central banks would need to tighten monetary policy aggressively in the near term.

At 16:52 WIB, spot gold rose 0.3% to $4,151.89 per troy ounce, while gold futures gained 0.5% to $4,179.15 per troy ounce.

The decline in oil prices came as hopes grew that crude oil supplies from the Middle East could gradually return to global markets. According to shipping data cited by Reuters, Gulf oil exporters exceeded pre-war levels for much of September.

Kpler data showed that the seven-day moving average of crude oil exports from the region reached 18.3 million barrels per day as of September 30. Export volumes remained above pre-war levels for 14 days last month, despite ongoing security risks in the region.

Expectations that crude oil supplies could resume have continued to increase, although the threat of attacks on tankers and other commercial vessels remains elevated.

Iran almost completely closed the Strait of Hormuz after the outbreak of the conflict, disrupting a vital shipping route that previously handled around one-fifth of global oil and liquefied natural gas supplies. The conflict has since spread to other parts of the Gulf, including Yemen, where Iran-backed Houthi militants and Saudi-backed government forces are competing for control of the Bab el-Mandeb Strait, another key shipping route.

Meanwhile, improving oil flows from the Gulf, combined with a commitment from the Group of Seven (G7) to release emergency energy reserves, has helped ease some concerns over global energy supplies. Brent crude futures edged lower, with the benchmark contract last trading at around $99.50 per barrel.

Weaker Jobs Data Supports Gold

Alongside weaker-than-expected US employment data, moderating oil prices could reduce pressure on the Federal Reserve to raise interest rates soon to contain persistent inflation.

The Fed is currently expected to hold interest rates steady at its October meeting before potentially raising borrowing costs in December. Minutes from the Federal Reserve's September meeting, when policymakers raised interest rates for the first time in three years, are due later this week and could provide further clues about the central bank's policy outlook.

Expectations for a delayed rate hike could benefit gold by reducing the opportunity cost of holding the non-yielding asset. Lower US Treasury yields following another sell-off on Monday also provided additional support for gold prices.

At the same time, the US Dollar Index, which tracks the greenback against a basket of major currencies, edged lower. A weaker dollar generally makes gold more attractive to international buyers because the precious metal becomes cheaper in other currencies.

ANZ analysts said gold had recovered from last week's sharp decline as investors reassessed rising global fiscal pressures. They also highlighted lower interest-rate expectations following weaker payroll data.

Markets are now pricing in roughly a 20% probability of an October rate hike, down sharply from around 70% a week earlier. The shift in expectations has helped improve sentiment toward gold as investors reassess the outlook for US monetary policy and inflation.

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Gold Gains Slowly

Gold Edges Higher After Weekly Decline as Weak Jobs Data Weighs on Fed Rate Hike Bets

Gold prices edged higher on Monday after posting their biggest weekly decline since June, as signs of weakness in the US labor market reduced expectations for another Federal Reserve interest rate hike. However, elevated Treasury yields and rising oil prices continued to weigh on the precious metal.

At 08:40 WIB, XAU/USD rose 0.3% to $4,153.66 per troy ounce, after falling 3.4% last week. XAG/USD gained 1.3% to $61.15, following a decline of more than 6% last week, its biggest weekly drop since mid-July. Platinum and palladium also moved higher, while the US dollar was little changed after strengthening for three consecutive weeks.

Weak Payrolls Ease October Fed Rate Hike Pressure

US nonfarm payrolls increased by just 29,000 in September, according to data released last Friday, falling well short of economists' expectations. The weaker employment figures have reduced pressure on the Fed to raise borrowing costs quickly in response to persistent inflation.

Markets are now pricing in roughly a 20% probability of a rate hike in October, down sharply from around 70% a week earlier. Higher interest rates typically reduce the appeal of gold because the precious metal does not generate interest income.

The weakening labor market comes after gold prices fell more than 6% in September, marking their largest monthly decline since June. The selloff was driven partly by concerns that energy-driven inflation could keep interest rates elevated for longer.

Nevertheless, Fed officials have continued to push back against expectations of an imminent rate hike. The Federal Reserve's September meeting minutes, when policymakers raised interest rates for the first time in three years, are due for release later this week and could provide further clues about the outlook for US monetary policy.

Rising Oil Prices Keep Inflation Risks Elevated

Inflationary pressures remain a concern as oil prices rise amid escalating tensions in the Middle East. In Yemen, Saudi-backed forces launched an operation aimed at retaking areas controlled by the Iran-backed Houthi group.

Higher energy prices could keep inflation elevated and complicate the Fed's policy outlook, even as weaker payroll data reduces the near-term pressure for another rate hike.

Treasury yields also remain elevated, with several maturities trading near their highest levels in more than two decades. US Treasury Secretary Scott Bessent played down concerns over rising borrowing costs, saying higher yields are broadly in line with global trends.

For gold, the combination of weaker US employment data and reduced expectations for an October Fed rate hike provides some support. However, elevated Treasury yields and renewed energy-driven inflation risks continue to limit the precious metal's upside potential, according to ANZ.

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