FX.co ★ XAU/USD, GOLD

Gold found buyers again at lower levels as markets opened this week, pushing the market to continue testing psychological support levels at $4,150 and $4,200 amid shifts in the macroeconomic landscape. This rebound was largely supported by a decline in oil prices, which helped alleviate broader concerns about energy-driven inflation and bolstered market confidence that the Federal Reserve will maintain its benchmark interest rate at its upcoming meeting. The G7's coordinated agreement to release 100 million barrels of crude oil and diesel from its strategic emergency reserves over four months, along with its shared commitment to avoid restrictive energy export policies, also contributed to the recent downward correction in the energy market. Furthermore, recent shipping data indicated that Middle East crude oil exports successfully surpassed pre-conflict levels within a few days at the end of last month, despite ongoing security concerns surrounding the vital Strait of Hormuz. These signs of improved market supply helped to alleviate concerns sparked by the Houthi drone and missile attacks on Saudi Aramco facilities in Riyadh and Khurais over the weekend, and by OPEC+’s decision to maintain its production quotas for November. Meanwhile, Friday’s notably weak US non-farm payrolls report shifted the overall economic landscape. The report showed only 29,000 jobs added in September, far below expectations of 90,000, and a downward revision to August’s data. The unemployment rate unexpectedly rose to 4.2%. This significant slowdown in the labor market led traders, using CME Group’s FedWatch tool, to estimate a greater than 80% probability of the Federal Reserve pausing its monetary policy in October. This shift toward a more accommodative monetary policy triggered a corrective pullback in US Treasury yields, providing support for non-income assets like gold. However, driven by rising geopolitical risk premiums, the dollar continued to demonstrate potential resilience, complicating the immediate upward trajectory for gold prices. Financial institutions such as TD Securities noted that while weak jobs data is putting slight downward pressure on the dollar, systemic geopolitical instability makes it more likely that the dollar will recover from its sharp rise rather than pursue new record highs for several months. Geopolitical tensions across various sectors around the world remain high, causing continued volatility in commodity markets. In the Middle East, the Iranian parliamentary leadership reiterated its stringent conditions for closing the Strait of Hormuz, while the Pentagon confirmed the evacuation of several B-1 bombers from RAF Fairford following credible security threats from Iran. Meanwhile, European energy security remains under pressure, with the Russian Defense Ministry threatening even harsher retaliatory strikes against Ukrainian military and industrial infrastructure in response to ongoing drone attacks on domestic oil refineries. These multifaceted geopolitical risks mean that any sudden disruption could easily reignite oil price spikes, fuel global inflation fears, and trigger another rise in US Treasury yields, putting significant pressure on gold. Therefore, market participants are closely watching the US Institute for Supply Management's services purchasing managers' index (PMI) data and scheduled remarks from key Federal Reserve officials to determine whether policymakers will confirm their expectations of a pause in monetary policy later this month. Technically, the daily chart shows a continued bearish trend in the near term, with the spot price hovering around $4136.75 and remaining confined within key moving average levels. The 100-day simple moving average (SMA) is at $4274.80, the 50-day SMA is at $4327.92, and the 200-day SMA is above $4532.80, forming a dense supply zone and limiting any effective recovery attempts. Meanwhile, the 14-day Relative Strength Index (RSI) is approaching 38, reflecting overall bearish momentum while remaining above oversold territory, leaving ample room for short-term consolidation or slight weakness. On the downside, immediate price action hinges on buyers successfully defending the current support zone around $4136.75, with additional support at the ascending trendline near $3999.52. Should the price decisively fall below this lower structural support level, the broader uptrend continuation pattern will fail, opening the door for a larger correction in the precious metals market.