FX.co ★ XAU/USD, GOLD

Gold (XAU/USD) maintained its upward momentum during the first half of Thursday's European trading session, surpassing the $4,150 per ounce mark, supported by a generally weaker dollar. The dollar initially rallied following Wednesday's stronger-than-expected US Consumer Price Index (CPI) data, but this rally quickly faded as the bond market reassessed the timing of central bank monetary policy adjustments. Despite the CPI rising to 3.7% year-on-year in September from 3.4%, and core inflation edging up slightly to 2.6%, market participants generally believed the Federal Reserve might not raise interest rates immediately at its meeting at the end of October. This shift triggered a sharp decline in US Treasury yields, prompting dollar bulls to take profits and ending a three-day losing streak for non-interest-bearing gold, which had touched a one-week low near $4,065-$4,075. The market reacted cautiously, in line with recent statements from central banks around the world, particularly those of San Francisco Federal Reserve President Mary Daly. Daly emphasized that while persistent energy price pressures and rising core inflation might warrant further monetary tightening, an October rate hike is not imminent. Daly's speech received a rating surpassing its historical high of 6.1/10, reflecting a firmly established hawkish stance based on data-driven patience rather than panic selling. Meanwhile, the FXS Federal Reserve Investor Confidence Index dipped slightly by 0.84 points to 128.17, indicating a slight easing of hawkish sentiment, but it remains above the neutral 100 level. The currency market continues to price in a greater than 85% probability of a 25-basis-point rate hike before the end of the year, maintaining a long-term hawkish framework and capping significant gains in safe-haven assets such as precious metals. In this macroeconomic context, ongoing geopolitical tensions at key trade and energy chokepoints are keeping the potential risk premium for the US dollar high, making it more attractive as a safe haven for liquidity. The security situation in the Middle East has deteriorated, with a container ship sinking in the Strait of Hormuz after being bombed; and, in response to coalition airstrikes on Sana'a, the Iranian-backed Houthi rebels launched a new round of drone and missile attacks on Saudi international airports and key energy infrastructure. Furthermore, energy risks in Eastern Europe have resurfaced, with Russia accusing Ukraine of launching targeted attacks on its oil refineries, allegedly violating the recently brokered US-brokered energy ceasefire agreement. These escalating conflicts have heightened concerns about energy supplies and inflation expectations, limiting the dollar's decline from its highest levels since April 2025 and reminding gold buyers not to overextend themselves ahead of Thursday's US Producer Price Index (PPI) data and Federal Reserve Chair Kevin Warsh's anticipated speech in Bangkok.

From a technical analysis perspective, the daily chart shows the gold/US dollar pair (XAU/USD) maintaining a resistance trend below the 100-period simple moving average (SMA) near $4180. Short-term momentum indicators point to continued downward pressure, despite the MACD histogram contracting but remaining below the signal line and the zero line, while the 14-period RSI is hovering near the neutral level of 50. On the upside, if gold prices manage to break above the 100-period simple moving average ($4180), they will encounter strong horizontal resistance in the supply zone between $4215 and $4220. Gold needs a clear daily close in this zone to reverse the current downtrend and open a technical path towards $4300. Conversely, on the downside, the initial structural support lies at the psychological level of $4100, which protects the major bottom between $4075 and $4065. A break below this level would confirm the resumption of the broader corrective downtrend, with a price target of $4000.