Gold Holds Firm

 

Gold Holds Near Weekly Highs Around $4,200 as Fed Rate Hike Expectations Cap Upside

Gold (XAU/USD) remained firm on Friday, revisiting the $4,200 level and extending its recovery from a two-month low. A weaker US Dollar, declining oil prices, and easing US Treasury yields provided some support for the precious metal as investors awaited US consumer sentiment data. Although market flows appear to be shifting back in favor of gold, bearish daily technical indicators continue to limit the potential for a stronger recovery.

Gold Price Forecast: XAU/USD Technical Outlook

On the daily chart, XAU/USD maintains a short-term bearish bias as the price remains below the 20-day Bollinger Band Simple Moving Average (SMA) near $4,239. However, gold continues to hold slightly above the lower Bollinger Band at $4,057 and the key horizontal support level at $4,100.

The Relative Strength Index (RSI) stands at 37, remaining in the lower half of its range, while the Moving Average Convergence Divergence (MACD) indicator stays in negative territory. Both indicators suggest that selling pressure remains in place, although gold has not yet reached extreme oversold conditions.

On the upside, initial resistance is located at the 20-day Bollinger Band SMA around $4,239, followed by the upper Bollinger Band near $4,420. A sustained move above these levels would be necessary to ease the current bearish outlook and signal a potential recovery.

On the downside, immediate support remains at $4,100, followed by the lower Bollinger Band at $4,057.47. A decisive break below this support zone could expose gold to further losses and extend the current correction.

US Treasury Yields and Oil Prices Pressure Gold

US Treasury yields remained near multi-year highs, driven primarily by rising oil prices that have intensified concerns about persistent inflation. Growing government debt, fiscal pressures, and the resilience of US economic growth have also contributed to upward pressure on Treasury yields.

Oil prices rebounded on Thursday, with West Texas Intermediate (WTI) crude rising approximately 3% following reports that the Pentagon had ordered preparations for potential new military strikes against Iran. Axios reported that military action could take place before the US midterm elections in November.

Strategists at Brown Brothers Harriman warned that persistently elevated energy prices could increase inflation risks, push policy rates and benchmark bond yields higher, and favor the currencies of energy-exporting countries. These conditions could also support the US Dollar relative to currencies from energy-importing economies.

They also highlighted that the United States' growth advantage and strong foreign demand for US securities provide additional support for the Greenback.

The US Dollar Index (DXY), which tracks the dollar against a basket of six major currencies, traded around 102.40, remaining close to the 18-month high of 102.53 reached earlier in the week. Expectations of a hawkish Federal Reserve continue to underpin the US Dollar, creating a challenging environment for gold.

Hawkish Fed Outlook Limits Gold's Recovery

Federal Reserve Governor Christopher Waller said on Thursday that further rate increases remain necessary, although the pace of tightening should remain flexible. He also noted that inflation is still too high, citing AI-related developments and ongoing energy shocks among the persistent inflationary pressures.

Minutes from the Federal Reserve's September meeting, released on Wednesday, showed unanimous support for a 25-basis-point rate increase to a target range of 3.75%–4.00%. Most participants also considered another rate increase later in the year potentially appropriate amid persistent inflation risks.

However, the minutes did not commit policymakers to another increase at the October 27–28 meeting. Market participants broadly expect the Fed to keep interest rates unchanged at that meeting while assessing incoming economic data and inflation developments.

A stronger US Dollar, elevated Treasury yields, and expectations of further monetary tightening have kept many gold buyers on the sidelines. Higher yields increase the opportunity cost of holding non-yielding assets such as gold, while a stronger dollar makes the metal more expensive for holders of other currencies.

Despite these headwinds, gold continues to receive underlying support from solid exchange-traded fund (ETF) demand and sustained purchases by central banks.

TD Securities noted that continued demand from discretionary traders, ETFs, and central banks provides a solid foundation for gold prices. The firm also suggested that these structural demand factors could eventually allow gold to become less sensitive to real interest rates and potentially establish a new uptrend extending into 2027.

Gold Price Outlook

Gold's recovery toward $4,200 signals improving short-term price action, but the broader technical outlook remains bearish while XAU/USD trades below the $4,239 resistance level. A sustained break above this threshold could open the way toward $4,420, while failure to hold $4,100 may expose the market to renewed downside pressure toward $4,057.

In the near term, gold's direction will likely depend on US Dollar movements, Treasury yields, energy-driven inflation concerns, and expectations for the Federal Reserve's next policy decisions. Although central bank and ETF demand continue to provide longer-term support, a sustained bullish reversal will require stronger technical confirmation.

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Gold Faces Pressure

Gold Struggles as Rising Yields and Hawkish Fed Signals Weigh

Gold reversed its modest recovery on Thursday as a stronger US Dollar and rising US Treasury yields limited upside momentum, keeping the precious metal in a bearish consolidation phase near its two-month low. At the time of writing, XAU/USD was trading around $4,119, down from the daily high of approximately $4,143.

On the daily chart, XAU/USD maintains a short-term bearish bias, with prices trading below the 20-day Bollinger Band Simple Moving Average (SMA) at $4,239. However, gold remains slightly above the lower Bollinger Band at $4,057 and the key horizontal support at $4,100.

The Relative Strength Index (RSI) stands at 37 and remains in the lower half of its range, while the Moving Average Convergence Divergence (MACD) indicator remains negative. Both indicators point to continued downside pressure, although gold has not yet entered extreme oversold territory.

On the upside, initial resistance is located at the 20-day Bollinger Band SMA near $4,239, followed by the upper Bollinger Band around $4,420. A sustained move above these levels would be needed to ease the current bearish bias.

On the downside, traders are likely to focus on the $4,100 support level, followed by the lower Bollinger Band at $4,057.47. A decisive break below this area could expose gold to deeper losses.

Rising Treasury Yields and Oil Prices Pressure Gold

US Treasury yields remain near multi-year highs, driven in part by a surge in oil prices that has renewed concerns over inflation. Rising government debt, fiscal concerns, and resilient US economic growth are also adding upward pressure to Treasury yields.

Oil prices rebounded on Thursday, with West Texas Intermediate (WTI) crude rising around 3% following reports that the Pentagon had ordered preparations for a possible new strike against Iran. Axios reported that military action could take place before the US midterm elections in November.

Strategists at Brown Brothers Harriman noted that sustained high energy prices increase the risks surrounding inflation, policy rates, and benchmark bond yields. They also argued that the environment could benefit currencies of energy-exporting countries and the US Dollar relative to those of energy-importing nations.

The strategists further highlighted that the relative strength of the US economy and strong foreign demand for US securities are providing additional support for the US Dollar.

The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, was trading around 102.40, close to its 18-month high of 102.53 reached earlier this week. The Federal Reserve's hawkish outlook continues to provide additional support for the US Dollar.

Hawkish Fed Outlook Limits Gold's Recovery

Federal Reserve Governor Christopher Waller said on Thursday, “More increases are still needed, but I am flexible about the pace.” Waller also noted that inflation remains too high, with AI investment and ongoing energy shocks among the persistent inflationary forces.

The Federal Reserve's September meeting minutes, released on Wednesday, showed unanimous support for a 25-basis-point rate hike to 3.75%-4.00%. Most participants also considered another rate increase appropriate later this year amid persistent inflation risks.

However, the minutes did not commit the Fed to another hike at its October 27–28 meeting, when markets broadly expect interest rates to remain unchanged.

A stronger US Dollar, elevated Treasury yields, and expectations of further Fed tightening have kept gold buyers on the sidelines. Nevertheless, gold's longer-term support remains intact, supported by solid ETF demand and continued purchases by central banks.

TD Securities said sustained demand from discretionary traders, ETFs, and central banks provides a strong foundation for gold. The firm believes the current correction could ultimately be contained by solid underlying demand and that gold may become increasingly decoupled from real interest rates, potentially paving the way for a new uptrend through 2027.

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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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