Gold prices (XAU/USD) remained under pressure on Friday, falling to around $3,965 during the Asian trading session, their lowest level since July. The precious metal struggled to gain support despite a broader risk-off sentiment in financial markets, as expectations of further Federal Reserve (Fed) rate hikes continued to dominate price action. As a result, gold was on track to end the month in negative territory. At the time of writing, XAU/USD was trading near $3,979, down almost 1% on the day.
Gold continued to decline within a well-defined descending parallel channel, reinforcing its bearish short-term outlook. The precious metal was also trading below the 100-period Exponential Moving Average (EMA) on the four-hour chart, strengthening the negative technical structure. This moving average is likely to act as dynamic resistance. Meanwhile, momentum indicators continued to signal selling pressure, with the Relative Strength Index (RSI) hovering around 35 and the Moving Average Convergence Divergence (MACD) remaining in negative territory. These signals suggest that sellers remain in control, while any recovery could face resistance at nearby levels.
Gold Price Forecast: Key Support Levels
On the downside, a sustained break below the previous monthly swing low near $3,975 could expose the next significant support level at the lower boundary of the descending parallel channel, around $3,946. A decisive move below this channel floor would provide a fresh bearish signal and potentially open the door to further losses in the coming trading sessions.
On the upside, any recovery attempt is likely to encounter initial resistance in the $4,025–$4,030 horizontal zone. A break above this area could trigger short-covering activity and lift gold toward the 100-period EMA near $4,093. Further gains could bring the upper boundary of the descending channel into focus around $4,126. This broader resistance zone would need to be reclaimed to ease the prevailing bearish pressure.
Strong US Growth Fuels Fed Rate Concerns
Preliminary estimates showed that US Gross Domestic Product (GDP) expanded at an annualized rate of 3.4% in the third quarter, accelerating from 2.2% in the previous quarter and exceeding the consensus forecast of 3.2%.
Meanwhile, the US Department of Commerce reported that the Personal Consumption Expenditures (PCE) Price Index rose 0.5% in September and increased 3.6% year over year. Core PCE inflation, which excludes volatile food and energy prices, advanced 0.3% month over month and 3.1% annually.
The stronger economic growth and persistent inflation pressures reinforced concerns that the Federal Reserve could maintain a restrictive monetary policy or consider further tightening. These expectations continued to weigh on gold, which typically faces headwinds when interest rates remain elevated because the non-yielding asset becomes less attractive relative to interest-bearing investments.
Treasury Yields Fall as Safe-Haven Demand Returns
Meanwhile, US Treasury yields declined as investors moved into government bonds following disappointing technology sector earnings. The results raised concerns that substantial investments in artificial intelligence (AI) might not generate sufficient returns, prompting a shift toward safer assets.
At the same time, renewed hopes for a diplomatic resolution to the Middle East conflict pushed the US Dollar (USD) lower for a third consecutive day. However, the weaker dollar provided only limited relief for gold as bearish momentum remained firmly in place.
In the latest developments, US Vice President JD Vance reportedly sent a letter directly to Mohsen Rezaei, secretary of Iran's Supreme National Security Council, in an effort to restart peace negotiations. Qatar also submitted a new draft agreement to Iran aimed at ending the war involving the United States and Israel.
These diplomatic initiatives raised hopes of easing regional tensions. Nevertheless, uncertainty surrounding the negotiations continued to limit the improvement in market sentiment.
Middle East Tensions Keep Oil Risks Elevated
Investors remained cautious amid rising hostility between Iran-backed Houthi forces in Yemen and Saudi Arabia. Meanwhile, threats by the United States and Israel to resume military strikes after the US midterm elections kept geopolitical risk premiums elevated.
Adding to supply concerns, Iran's navy claimed on Thursday that four oil tankers had struck naval mines in the Strait of Hormuz. The report intensified fears of potential disruptions to global energy supplies and supported oil prices.
Higher oil prices could add to inflationary pressures, potentially reinforcing expectations that the Federal Reserve will keep monetary policy restrictive for longer. This scenario could continue to limit gold's recovery potential, even as geopolitical uncertainty typically supports demand for safe-haven assets.
The combination of persistent inflation, expectations of tighter Fed policy, and elevated geopolitical risks suggests that gold could remain vulnerable to further selling. Despite the weaker US dollar and declining Treasury yields, market conditions indicate that any rebound in XAU/USD may attract renewed selling interest.
Gold prices were also on track to record a monthly loss of approximately 3.5%, highlighting the persistent bearish pressure surrounding the precious metal.