Today, Wednesday, gold (XAU/USD) is declining for the third consecutive day, reaching a new weekly low. However, prices remain within the range established two weeks ago, as market participants prefer to wait for fresh US inflation data before establishing more directional positions.
The US Consumer Price Index (CPI) report will be released later today, followed by the Producer Price Index (PPI) on Thursday. On Friday, traders will focus on a speech by Federal Reserve Chair Kevin Warsh at the annual meetings of the International Monetary Fund (IMF) and the World Bank in Bangkok. His comments could provide further guidance on the Fed's future monetary policy and influence the movements of the US dollar and gold.
According to CME Group's FedWatch tool, the market assigns a probability of nearly 90% to another Fed rate hike at the December meeting. Expectations of tighter monetary policy have strengthened following hawkish statements by influential members of the Federal Open Market Committee (FOMC), who indicated that further rate increases could be possible before the end of the year amid persistent inflationary pressures.
High energy prices remain an additional risk factor for gold. Oil has risen to a two-week high amid concerns about supply disruptions resulting from escalating conflicts in the Middle East.
In particular, tensions have intensified between the Iran-backed Houthis and Saudi Arabia. A coalition led by Riyadh has reportedly carried out strikes on energy facilities and fuel storage sites linked to the Houthis.
Tensions between the United States and Iran in the Strait of Hormuz also persist. US Central Command rejected claims by the commander of Iran's Islamic Revolutionary Guard Corps Navy that Iran controls this strategic shipping route, as well as threats directed at US warships. These developments are sustaining a geopolitical risk premium in oil prices while reinforcing expectations of persistent inflation and a more restrictive Fed policy, creating obstacles to further gains in gold.
At the same time, the US dollar is struggling to attract new buyers and remains below the high reached in April 2025.
This provides some support for XAU/USD. Overall, however, the fundamental backdrop remains unfavorable for the precious metal, and the short-term path of least resistance continues to point downward. A decisive breakout beyond the two-week trading range could change short-term sentiment and restore the advantage to buyers.
Excluding last week's sharp drop to a two-month low, the current price action can be characterized as a phase of bearish consolidation following the decline from the August high. Gold is holding slightly above the $4,130 level. Oscillators remain in negative territory, confirming the bears' advantage. A decline below the psychological $4,100 level would open the way toward the October low, while a break above the 20-day simple moving average (SMA) would ease bearish pressure.
