Gold prices (XAU/USD) attempted to recover above the psychological $4,000 level on Friday after falling to $3,986 during the Asian trading session, marking the lowest level since July. The rebound came as bargain hunters entered the market following Thursday’s sharp sell-off, which saw the precious metal lose 2.81%.
Gold Technical Analysis: Bearish Momentum Persists
On the daily chart, XAU/USD continues to correct below all major moving averages, maintaining a bearish short-term outlook. Momentum indicators remain weak, with the Relative Strength Index (RSI) hovering around 35 and approaching oversold territory. Meanwhile, the Moving Average Convergence Divergence (MACD) remains below zero with a negative reading, indicating that selling pressure continues to dominate.
The Average Directional Index (ADX) has edged higher to around 24, suggesting that the bearish trend is gradually gaining strength.
On the upside, immediate resistance stands at the psychological $4,100 level, followed by another horizontal barrier at $4,200. The 100-day Simple Moving Average (SMA) at $4,224 reinforces this resistance zone and represents a major obstacle to any sustained recovery.
A break above this level could bring the 50-day SMA at $4,302 into focus, potentially opening the way toward the $4,400 area. Further resistance is located at the 200-day SMA near $4,509, which continues to define the broader bearish technical structure.
On the downside, failure to hold above $4,000 could trigger further losses, exposing initial support at $3,950, followed by the $3,900 zone. A sustained break below $3,900 could pave the way for a deeper decline toward $3,800.
Treasury Yields and Oil Prices Pressure Gold
Rabobank analysts described Thursday as a “brutal day for markets,” noting that the S&P 500 fell 1.2% to 7,663, dragged lower by the Philadelphia Stock Exchange Semiconductor Index, which moved toward its lowest level since July.
The sharp equity sell-off triggered a strong rally in government bonds. Rabobank highlighted that weakness in equities supported US Treasuries, with the benchmark 10-year US Treasury yield falling below 5% for the first time since September, despite higher energy prices. The two-year Treasury yield also dropped below 4.75%.
However, gold failed to benefit from falling equity prices and declining US Treasury yields on Thursday, as several other factors weighed on the precious metal.
Escalating Middle East tensions continued to support energy prices, with West Texas Intermediate (WTI) crude oil trading near $100 per barrel, close to a five-week high. Higher oil prices have intensified inflation concerns, strengthening expectations that interest rates could remain elevated for longer.
This outlook increases the opportunity cost of holding non-yielding assets such as gold, making the precious metal less attractive to investors.
Some traders may also have sold precious metals to cover losses in equities. Technical selling likely added further pressure after gold broke below the $4,100–$4,200 trading range that had largely held since early October.
US Dollar Stabilizes as Gold Remains Vulnerable
Against this backdrop, gold remains vulnerable to renewed selling pressure during temporary rebounds, particularly as the US dollar and Treasury yields show signs of stabilization following Thursday’s declines.
The US Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, traded around 101.78, up 0.14%. Meanwhile, the benchmark 10-year US Treasury yield stood near 4.99%.
Later on Friday, traders will focus on the preliminary October S&P Global Purchasing Managers’ Index (PMI) readings and the University of Michigan’s final consumer sentiment survey, including its inflation expectations component.
These economic indicators could influence expectations for the Federal Reserve’s monetary policy and determine whether gold can extend its recovery above $4,000.
Federal Reserve Meeting in Focus Next Week
The Federal Reserve is widely expected to leave interest rates unchanged after delivering a 25-basis-point rate hike in September.
Investors will closely monitor how policymakers balance persistent inflation risks against concerns that a slowdown in AI-related investment could weigh on economic growth.
Any indication that another rate increase remains possible in December could limit gold’s recovery. Higher interest rates generally support the US dollar and increase the opportunity cost of holding non-yielding assets, potentially keeping XAU/USD under pressure.
For now, the $4,000 psychological level remains a critical area for gold traders. Holding above this threshold could support a short-term rebound, while a decisive break below it would increase the risk of further declines toward $3,950, $3,900, and potentially $3,800.