FX.co ★ XAU/USD, GOLD

Gold (XAU/USD) rallies toward $4,160 in early morning Asian trading on Monday. The commodity bounces on weak US Nonfarm Payrolls (NFP) figures, which have weighed on the US Dollar (USD). Investors reduced positions in US Fed rate-hike bets amid weak jobs data. US NFP rose by 29K in September, according to the US Bureau of Labor Statistics (BLS) release on Friday. The figure follows an increase of 133K in August (originally 162K), while markets expected 90K. The market now expects a 22.1% chance of a rate increase in the US, down from about 70% earlier in the week, the CME FedWatch Tool revealed. Higher interest rates can also weigh on gold prices because gold pays no interest. However, rising oil prices amid ongoing tensions between the US and Iran may increase inflation fears and affect gold prices. On Sunday, Iran's Foreign Ministry spokesman Esmaeil Baqaei mentioned that Iran's efforts to reach an agreement to end the war with the US revolve around the Strait of Hormuz. For his part, Parliament Speaker Mohammad Bagher Ghalibaf said Tehran will not compromise on its conditions to open this key waterway, calling the alleged US demands "unilateral." Based on UOB Group analysts, "Gold spot was softer at $4,156/oz as elevated real yields capped the bullion's upside," whereby the metal would "revert to earlier losses - where it hit as high as $4,219/oz - to end down 0.6% at $4,157/oz as elevated real yields kept capping the bullion's upside." On the macroeconomic front, UOB Group observes that "US headline PCE was unchanged at 0.3% m/m in Aug, matching expectations, while the y/y rate declined to 3.4% from 3.7% in the previous month," while at the same time noting that "BEA methodology revisions have just improved the optics without changing the underlying inflation narrative." Fed's Logan takes a notably hawkish tone, with the 9.2/10 FXS Speechtracker rating well above the 8.1/10 historical average, implying a stronger lean toward future rate hikes than the baseline. The suggestion that high yields might imply larger term premiums, thereby easing pressure for additional tightening, is secondary to the clear calls for at least 50 bps more rate hikes and several other moves to restore price stability, which lean hawkish on rate hikes and provide a positive environment for the Dollar. The Fed's view that policy is not yet restrictive, along with economic expansion and a balanced labor market, suggests the Fed is ready to hike rates until inflation convincingly converges to 2%. The FXS Fed Sentiment Index rises 1.68 points to 136.59, indicating a hawkish stance and aligning with the high reading of the FXS Speechtracker. It confirms that implied market Fed rhetoric has become even more hawkish, suggesting more rate hikes and contributing to the structurally positive Dollar environment.

On the daily chart, XAU/USD shows bearish near-term momentum, staying below the 100-day simple moving average (SMA) and Bollinger middle band. Price is staying close to the lower Bollinger band support, suggesting the ongoing decline is pushing against the lower boundary of the current volatility range. The Relative Strength Index (14) at 39.50 remains in the bearish zone without approaching oversold levels, indicating continued bearish momentum. As for the upside barriers, there is an important concentration of resistance around the Bollinger middle band at $4,275 and the 100-day SMA at $4,275, a tough ceiling that will need to be crossed to weaken the bearish outlook, with further resistance coming at the upper Bollinger band level of $4,445. As for immediate support, the lower Bollinger band sits at $4,102.30; a breach will signal further decline, while holding will confirm the pair is consolidating bearishly within the wider range.