FX.co ★ XAU/USD, GOLD

In early European trading on Thursday, gold (XAU/USD) prices rebounded slightly from their intraday lows, but due to the overall short-term bearish trend, price action remains capped at the $4,050 mark. The US dollar retreated from two-week highs following Wednesday's Federal Open Market Committee (FOMC) meeting, regaining buying interest and once again becoming the primary macro catalyst exerting downward pressure on non-interest-bearing gold. As widely anticipated by the market, the FOMC voted 10-2 at its October meeting to keep the benchmark interest rate unchanged at the target range of 3.75%-4.00%. Federal Reserve Governor Lisa Cook and Cleveland Fed President Beth Hammack voted against and in favor of an immediate 25-basis-point rate hike. At the press conference following the meeting, Federal Reserve Chairman Kevin Warsh maintained a cautious policy tone, emphasizing the Fed’s commitment to curbing persistent inflation driven by rising costs and managing ongoing geopolitical risks. Influenced by higher energy prices, market participants still believe the probability of the Fed raising interest rates by 25 basis points at its December policy meeting is close to 80%, according to CME Group’s FedWatch tool. This hawkish stance has boosted demand for the dollar and reduced demand for spot gold. Meanwhile, ongoing geopolitical uncertainty in the Middle East continues to drive safe-haven flows toward the US dollar. A report in The Wall Street Journal indicated that US officials have advised several Gulf Arab states to prepare for a short-term, intensive military campaign against Iran following the US midterm elections on November 3. In response, Iranian Foreign Minister Abbas Araqchi stated that Tehran’s armed forces are fully prepared to defend the country’s sovereignty and that Iran is maintaining diplomatic channels through regional mediators to seek a peaceful resolution. Meanwhile, regional mediators, led by Qatar, are actively working to resume direct dialogue between the United States and Iran to prevent an escalation of regional conflicts. Reports indicate that US Vice President Vance sent a letter to Iranian Supreme National Security Council Secretary Mohsen Rezaei in an effort to restart negotiations, providing evidence of these efforts. However, the underlying geopolitical risk premium remains high due to the ongoing conflict between the Iranian-backed Houthi rebels and the Saudi-backed Yemeni government. Recent Houthi missile attacks on the Ras Tanura oil refinery in Saudi Arabia and on crude oil pumping stations between the east and west have underscored this situation. These concerns about supply disruptions continue to support energy prices and reinforce the dominance of the US dollar. However, traders are likely to remain cautious ahead of the upcoming release of high-impact US macroeconomic data, including the preliminary Q3 GDP and the core PCE price index for September.

Looking at the technical analysis on the daily chart, the XAU/USD pair continues to trade within a clear descending parallel channel that has dominated price action over the past month and remains below the 100-period exponential moving average (EMA), which is near $4,105. Dynamic momentum indicators are showing slight signs of stabilization. The Moving Average Convergence Divergence (MACD) has entered positive territory, while the 14-period Relative Strength Index (RSI) is hovering around the neutral 47.5 line. However, technical analysts believe these small gains in momentum suggest a temporary pullback within a dominant downtrend rather than a structural reversal. Any short-term rebound is expected to face strong initial technical resistance at the 100-period moving average near $4,105, followed by resistance at the upper edge of the descending channel (around $4,125), where selling pressure is likely to resurface. Conversely, the psychological level of $4,000 provides immediate structural support before the lower boundary of the descending channel near $3,946. A significant break below the technical bottom at $3,946 would confirm the structural continuation of the overall bearish pattern and open the door for a deeper push towards the $3,900 target in subsequent sessions.