FX.co ★ XAU/USD, GOLD

Gold prices (XAU/USD) edged higher on Thursday, supported by lower U.S. Treasury yields and a weaker dollar, despite continued signals from Federal Reserve officials about future monetary policy tightening. Spot prices rebounded from a low near $4,103, rising about 0.48% to trade around $4,130. The broader precious metals market continues to face a complex mix of factors, attempting to balance persistent geopolitical inflation risks with fluctuating central bank interest rate expectations. On the macroeconomic front, the ongoing crisis in the Middle East—characterized by volatile energy prices and security incidents near the Strait of Hormuz—has kept global bond yields elevated, near multi-year highs. U.S. West Texas Intermediate crude oil held steady near $90.85 a barrel (up more than 2%), after comments from U.S. President Trump limited gains. Trump indicated that the U.S. would avoid a military strike against Iran before the upcoming midterm elections, easing concerns about short-term supply shocks. However, intelligence reports indicate that the Iranian leadership remains wary of Western intentions, ensuring that geopolitical considerations continue to heavily influence asset valuations. The Federal Reserve maintains its hawkish stance but is heavily data-dependent. St. Louis Fed President Alberto Musallam emphasized that persistent inflation and a resilient labor market necessitate the Fed's continued focus on price stability. Meanwhile, Federal Reserve Governor Christopher Waller indicated that while further rate hikes may be necessary in the future, there is no need for consecutive increases, effectively ruling out an immediate rate hike at the next monetary policy meeting on October 27-28. The market currently views an October rate hike as highly unlikely, while the probability of a 25-basis-point increase in December is approaching 81%. Domestically, initial jobless claims in the US for the week ending October 3rd fell slightly to 197,000, better than the previous week's forecast of 200,000 and the 199,000 recorded the week before, indicating continued strength in the labor market with low hiring and layoff rates.

Technically, while recent buying pressure has pushed spot gold prices back above $4,100, the overall medium-term downtrend for gold remains intact. Wednesday's Japanese candlestick pattern showed a clear engulfing pattern, a hallmark of a potential bullish inside candle, but market participants are still waiting for a breakout from key resistance levels to definitively confirm a trend reversal. Momentum indicators, such as the Relative Strength Index (RSI), remain in bearish territory, suggesting that the potential downward pressure has not yet fully dissipated. The short-term bearish support level is firmly established around $4,100. A break below this level could lead to a test of the psychological support level at $4,000, followed by the July 29 low of $3,996 and the year-to-date low of $3,941. Conversely, if buyers manage to reclaim the $4,200 level, technical analysis will likely target the 100-day and 50-day moving averages at around $4,263 and $4,332, respectively. Should prices continue to break above these moving averages, they could rise further to around $4,500, targeting the key 200-day moving average at $4,529. Traders should closely monitor changes in US Treasury yields, geopolitical news, and consumer confidence indicators (such as the University of Michigan index) to identify short-term trends.