FX.co ★ XAU/USD, GOLD

Gold prices (XAU/USD) continued their decline on Friday, falling by approximately 0.60% to around $4,000 per ounce, after hitting a three-month low of $3,975 per ounce earlier in the session. Gold prices were pressured by rising global energy prices, which may have contributed to a decline of approximately 3.90% this week. The surge in energy prices exacerbated inflation concerns and reinforced market expectations that major central banks will further tighten monetary policy. Escalating geopolitical tensions in the Middle East also contributed to overall market instability. Earlier reports indicated that the US and Israel were coordinating a joint strategic deployment for a potential military strike against Iran following the US midterm elections. Meanwhile, reports of the Iranian Revolutionary Guard intercepting ships transiting the Strait of Hormuz, and the ongoing military conflict between the Houthis and Saudi Arabia, have significantly eroded confidence in global financial markets. US domestic economic indicators presented a mixed picture, showing a decline in consumer confidence on one hand, and continued expansion in private sector activity on the other. The University of Michigan's consumer confidence index fell to 48.0 in October, its lowest level in five months, down from 48.1 in the previous month. This decline was primarily attributed to rising energy prices and market expectations that the Federal Reserve would maintain high interest rates for an extended period. While short- and long-term inflation expectations remained stable, they are still well above the Fed's target, with consumers anticipating inflation of 4.7% over the next twelve months and 3.5% over the next five years. Meanwhile, preliminary data from the Standard & Poor's global Purchasing Managers' Index (PMI) showed that the US manufacturing PMI rose to 56.0 in October from 55.9 in September, while the services PMI fell to 57.9, in line with baseline expectations. In the energy market, geopolitical risk premiums pushed West Texas Intermediate (WTI) crude futures prices up by more than 4%, pushing the benchmark US crude oil price back above the psychologically important $100 per barrel level. Continued high energy costs increase the likelihood that the Federal Reserve will have to raise interest rates to bring inflation back to its 2.0% target. While the financial market has largely priced in the likelihood of a rate hike at next week's Federal Open Market Committee (FOMC) meeting, interest rate futures tracked by the Prime Terminal platform show a 78% probability of a 25-basis-point rate increase at the December meeting. Market participants' attention is now focused on key events next week, including the Fed's two-day monetary policy decision on Tuesday and Wednesday, and the release of the core personal consumption expenditures (PCE) price index on Thursday, the Fed's preferred inflation gauge. From a daily technical analysis perspective, the price remains trapped in a downtrend after sellers pushed the spot price to a three-month low of $3,975. While buyers attempt to hold above $4,000, the technical situation remains favorable for bears, as the trend of lower highs and lows continues, and the 14-day Relative Strength Index (RSI) approaches oversold territory. If the downtrend persists, the initial dynamic support level is at Friday's low of $3,975; a break below this level could lead to a test of the July 17 low of $3,959, followed by a further decline to this year's low near $3,941. Conversely, on the upside, bulls need to reclaim the resistance level at $4,100 to trigger a broader rally towards $4,200. A break above this resistance level would target the 100-day simple moving average at $4,224, the 50-day simple moving average at $4,302, and the key psychological level at $4,500.