Gold Prices Rebound

 

Gold prices edged higher after recovering from weekly lows near $4,100, but the upside remains limited by a bearish fundamental backdrop. Inflation risks driven by volatile oil prices are reinforcing expectations that the US Federal Reserve (Fed) could tighten monetary policy further. Meanwhile, a modest recovery in the US Dollar from a three-week low is adding pressure on bullion and limiting its recovery potential.

Technical Outlook: Gold Remains Bearish

Gold's failed attempt to break above the 100-period Exponential Moving Average (EMA) on the four-hour chart, followed by a subsequent decline, reinforces the negative technical outlook.

The Moving Average Convergence Divergence (MACD) indicator remains in negative territory, with its latest reading at -4.65. Meanwhile, the Relative Strength Index (RSI) stands at 39.16, indicating weak momentum without yet signaling oversold conditions.

A sustained break below the $4,100 level would strengthen the bearish bias and expose the monthly swing low near $4,066.

Further selling pressure could accelerate losses toward the psychological $4,000 mark, followed by the year-to-date low around $3,943–$3,942, recorded in June.

On the upside, the 100-period EMA near $4,175 is likely to act as the nearest significant resistance. A sustained move above this barrier would be needed to ease the current bearish pressure and open the door to a stronger recovery.

Oil Volatility Supports Fed Rate Hike Bets

Crude oil prices experienced a dramatic intraday reversal on Tuesday, retreating from a more-than-one-month high amid renewed hopes for US-Iran peace negotiations.

An unconfirmed report suggested that Qatar and Pakistan had proposed a compromise plan to Washington and Tehran that could address both sides' demands. However, Bloomberg subsequently reported that a diplomat involved in the negotiations denied reports that an agreement was close.

Iranian state media also reported that Parliament Speaker Mohammad Bagher Ghalibaf told Pakistan's army chief, Asim Munir, that the United States could not earn Iran's trust without meeting previously announced conditions. These reportedly included ending all hostilities and unfreezing Iranian assets, dampening expectations of an imminent diplomatic breakthrough.

Adding to uncertainty, Iran's First Vice President said the country had no choice but to exercise sovereignty over the Strait of Hormuz. The statement heightened concerns about potential disruptions to crude oil supplies and helped oil prices rebound sharply from their weekly lows.

The renewed oil price recovery comes after hotter-than-expected US inflation data released last week, strengthening market expectations of another Federal Reserve rate hike. According to the CME Group FedWatch Tool, traders are pricing in a probability of more than 90% that the US central bank will raise borrowing costs again in December.

Meanwhile, persistent uncertainty surrounding the Middle East crisis is providing some support for the US Dollar as a safe-haven asset. This has become another headwind for gold, contributing to its fourth consecutive day of losses and increasing the risk of a deeper correction.

Fed Outlook: October Hold, December Hike

Analysts at BNY Markets reiterated that they do not expect a rate hike at the Fed's upcoming October meeting, noting that market expectations are broadly aligned with this view. They added that markets are currently pricing in only a 17% probability of a rate increase at the next Federal Open Market Committee (FOMC) meeting.

Instead, BNY considers December the most likely opportunity for the next federal funds rate increase and expects it to be the final hike in the current tightening cycle.

Looking further along the policy curve, BNY noted that the implied federal funds rate for December 2027 is now just 4.64%, suggesting slightly less than 75 basis points of additional tightening. These expectations are also somewhat below the most hawkish levels seen several weeks ago.

Nevertheless, investors may remain cautious about taking aggressive directional positions until clearer signals emerge regarding the Fed's policy trajectory.

Market attention will therefore focus on the two-day FOMC policy meeting scheduled for October 28–29 and the US Personal Consumption Expenditures (PCE) Price Index due on October 29. The PCE index is the Fed's preferred inflation gauge and could provide further clues about the outlook for interest rates.

Monetary policy decisions from other major central banks next week, including the Reserve Bank of New Zealand (RBNZ), Bank of Canada (BoC), European Central Bank (ECB), and Bank of Japan (BoJ), may also influence market sentiment toward non-yielding gold.

Overall, the combination of elevated oil prices, persistent inflation concerns, a potentially hawkish Federal Reserve, and a modestly stronger US Dollar continues to favor gold sellers. Unless XAU/USD breaks decisively above the $4,175 resistance zone, the near-term path of least resistance remains to the downside.

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Gold Prices Slide

 

Gold prices declined toward $4,120 during European trading on Tuesday as recovering US Treasury yields and rising oil prices weighed on the precious metal. Investors are also monitoring upcoming third-quarter earnings reports from major US technology companies, including Meta Platforms, amid growing concerns about AI-related capital spending and its implications for economic growth.

Gold Price Forecast: XAU/USD Faces Bearish Pressure

Spot gold (XAU/USD) traded near $4,120, maintaining a short-term bearish bias as prices remained below the 20-day Exponential Moving Average (EMA) at $4,186.57. The precious metal has retreated from recent highs and is struggling to regain this key technical level, suggesting that selling pressure continues to limit its recovery.

The Relative Strength Index (RSI) stood at 43.66, below the neutral 50 mark. This indicates that bearish momentum remains in place, although gold has not yet entered oversold territory.

On the upside, the 20-day EMA at $4,186.57 represents the nearest resistance. A daily close above this level would help ease downward pressure and potentially open the door for a more sustained recovery toward $4,300.

On the downside, the psychological $4,000 level remains a major support area for gold. A break below this threshold could expose the precious metal to further losses.

US Treasury Yields Recover Ahead of Meta Earnings

The US third-quarter earnings season is underway, with Meta Platforms among the major technology companies scheduled to report its results on Wednesday. Microsoft, Amazon, and Alphabet are expected to release their quarterly earnings next week.

According to Goldman Sachs, Meta is among five major AI hyperscalers expected to increase their combined capital expenditure to approximately $1.2 trillion next year, Reuters reported.

Such substantial investment could support economic growth and make growth-oriented assets more attractive to investors compared with traditional alternatives. However, concerns about the sustainability of AI infrastructure spending have recently weighed on market sentiment and influenced US Treasury yields.

Deutsche Bank analysts noted that growing concerns about AI-related economic growth had triggered a significant flight to safety in fixed-income markets. This shift helped support government bonds as investors reassessed the economic outlook.

The bank highlighted that the 10-year US Treasury yield fell 16.5 basis points last week, reaching 5.07% before edging up 1.5 basis points on Friday. The recent movements reflect changing investor expectations regarding economic growth and the outlook for financial markets.

Although Treasury yields showed signs of recovery on Monday, the 10-year yield was reported down 0.35% near 5.13% at the time of writing. Higher yields can weigh on gold because the precious metal does not offer interest income.

Oil Prices Rise on Middle East Risks

Oil prices have climbed nearly 15% over the past two weeks from a recent low of $86.32. West Texas Intermediate (WTI) crude was trading slightly higher near $98.45 at the time of writing.

Persistent tensions in the Middle East have prompted investors to maintain a substantial geopolitical risk premium in oil prices. Reports that Iran could expand the scope of a potential blockade to include the Bab el-Mandeb Strait and the Suez Canal have raised concerns about disruptions to global energy supplies.

Additional concerns emerged after Mohsen Rezaei, a member of Iran's political and security establishment, warned over the weekend that Tehran had prepared new retaliatory plans in the event of further US-Israeli attacks.

Higher oil prices could complicate the inflation outlook by increasing energy costs. This could also influence Federal Reserve policy expectations and indirectly affect gold prices through changes in Treasury yields and the US dollar.

Federal Reserve Enters Blackout Period

The Federal Reserve has entered its blackout period ahead of its upcoming monetary policy announcement. During this period, Fed officials generally refrain from public comments on monetary policy.

Recent remarks from several policymakers have emphasized the importance of bringing inflation back to the central bank's 2% target. However, officials have not indicated an urgent need for another interest rate increase.

Meanwhile, the CME FedWatch Tool suggests that market participants expect the Fed to leave interest rates unchanged in October, while pricing in the possibility of a rate hike in December.

The combination of Treasury yield movements, oil price volatility, geopolitical tensions, and changing Fed expectations is likely to remain central to gold's near-term direction.

For now, XAU/USD faces a bearish technical outlook while trading below $4,186.57. A sustained break above this resistance could support a recovery toward $4,300, whereas the $4,000 psychological level remains the key downside support to watch.

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Gold Remains Supported

Gold prices held onto their recent gains but struggled to break above the $4,200 psychological level during Monday’s European trading session. Federal Reserve Chair Kevin Warsh’s cautious comments on future monetary policy reduced market expectations for an October interest rate hike. Meanwhile, declining US Treasury yields after retreating from multi-year highs continued to support the non-yielding precious metal.

Despite the recent recovery, gold’s broader technical outlook remains cautious. XAU/USD is still trading below the 200-period Simple Moving Average (SMA) on the four-hour chart, suggesting that the latest rebound represents a corrective recovery within a broader bearish structure rather than the beginning of a confirmed uptrend.

The Relative Strength Index (RSI) stands at 55.1, indicating a modest bullish bias. The Moving Average Convergence Divergence (MACD) also remains in positive territory, although its momentum has weakened slightly. To strengthen the bullish outlook, gold needs to reclaim the $4,200 level and break above the $4,215–$4,220 resistance zone. A sustained move beyond this range could ease selling pressure and improve the medium-term outlook.

On the downside, immediate support is located around $4,150–$4,145, followed by the psychological $4,100 level. Further support lies near last week’s swing low at $4,075–$4,065. A decisive break below this area could expose gold to additional losses, potentially bringing the July year-to-date low near $3,957 back into focus.

Fed Outlook Shifts Gold Prices

Deutsche Bank strategists highlighted the importance of the Federal Reserve’s upcoming blackout period ahead of its October 27–28 policy meeting. Warsh refrained from challenging market expectations for interest rates, stressing that he would not prejudge the outcome of the upcoming meeting despite hotter-than-expected US inflation data released last week.

Markets interpreted Warsh’s relatively restrained tone as a positive surprise. According to Deutsche Bank, the probability of an October rate hike declined to approximately 15%, down from around 30% when he spoke. Equity futures also strengthened, with S&P 500 and Nasdaq futures each rising 0.15% after spending much of the session in negative territory. Stoxx futures advanced 0.68%.

However, uncertainty surrounding the Federal Reserve’s policy outlook continues to limit gold’s upside potential. Although expectations for an October rate hike have eased, traders remain concerned that persistent inflation could force the central bank to maintain a restrictive monetary stance.

According to the CME Group FedWatch Tool, markets are pricing in a probability of more than 90% that the Federal Reserve will raise interest rates in December. This outlook reflects growing concerns that inflationary pressures could remain elevated for longer than previously anticipated.

Energy prices are another key factor influencing expectations for future monetary policy. Crude oil climbed to its highest level in nearly a month on Friday as escalating geopolitical tensions in the Middle East and Eastern Europe heightened concerns about global energy supplies.

Geopolitical Risks Support Gold

Geopolitical developments continue to influence financial markets and commodity prices. Over the weekend, three tankers were reportedly damaged in the Strait of Hormuz as Iran’s Islamic Revolutionary Guard Corps (IRGC) navy maintained that the strategic waterway remained closed and that vessels could pass only with its authorization.

In Eastern Europe, Ukrainian attacks sparked fires at an oil export terminal and a storage depot in St. Petersburg on Sunday. Kyiv reportedly launched more than 1,000 drones toward Russia in one of the largest aerial attacks of the ongoing conflict.

Meanwhile, tensions between Saudi Arabia and Iran-backed Houthi rebels in Yemen have shown little sign of easing. Iran’s Supreme National Security Council secretary, Mohsen Rezaei, also warned that Tehran had prepared new retaliation plans should the United States and Israel resume attacks.

These developments have kept geopolitical risk premiums elevated, supporting crude oil prices and contributing to uncertainty across global financial markets. At the same time, shifting demand for safe-haven assets has influenced the US dollar and gold, leaving the precious metal caught between competing market forces.

XAU/USD Faces Key Resistance

Gold has remained within a relatively narrow trading range for more than three weeks as declining US Treasury yields and geopolitical uncertainty provide support, while expectations of tighter Federal Reserve policy continue to weigh on the market.

In the near term, the $4,200 level remains a crucial psychological threshold for XAU/USD. A sustained breakout above $4,220 could strengthen the recovery and improve the technical outlook. Conversely, a break below $4,065 would increase the risk of further losses, with the July low near $3,957 emerging as a potential downside target.

For now, traders may remain cautious while waiting for a clear breakout from the current range. Stronger buying momentum above resistance or renewed selling pressure below support could determine gold’s next directional move as markets assess the Federal Reserve’s policy outlook, Treasury yields, inflation risks, and ongoing geopolitical tensions.

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