FX.co ★ XAU/USD, GOLD

During the first half of the European trading session, gold (XAU/USD) failed to capitalize on a brief intraday rally to around $4,200, ultimately closing virtually unchanged. The dollar continued its ascent, maintaining upward pressure on the currency. While data from the US Bureau of Economic Analysis showed the Personal Consumption Expenditures (PCE) price index rising 3.4% year-on-year in August—the same figure revised downward in July but below market expectations of 3.7%—and despite weak core indicators, broader macroeconomic fundamentals remained favorable to the dollar. The US second-quarter GDP growth rate was revised upward from 1.5% to 2.2%, pushing US Treasury yields to multi-year highs, offsetting the weak inflation data and reinforcing expectations of further monetary policy tightening. Jan Ghlen, an analyst at Société Générale, noted that while headline and core inflation data showed some slowdown in certain sectors, such as goods, concrete data indicated continued acceleration in both services and core inflation. This suggests that overall price pressures remain very high and that the Federal Reserve cannot afford to relax its oversight entirely. This strong economic backdrop, coupled with geopolitical concerns stemming from the ongoing confrontation between the United States and Iran, has significantly boosted demand for the US dollar as a safe haven. Reports indicate that President Trump rejected Tehran’s seven-day peace proposal and stated that he expects to resume large-scale military operations and new strategic bombing campaigns after the November midterm elections, effectively ending hopes for a diplomatic solution. Furthermore, the Iranian delegation’s immediate departure from Washington, reportedly on official instructions, exacerbated these tensions, keeping geopolitical risk premiums elevated. According to CME Group’s FedWatch tool, market participants still expect an 85% probability of a Federal Reserve interest rate hike before the end of the year, providing strong support for yields and significantly limiting the potential for a rise in non-interest-bearing gold prices. Market participants are currently closely monitoring a series of key US economic data releases, including weekly initial jobless claims, the ISM manufacturing purchasing managers’ index (PMI), and key speeches by Federal Open Market Committee (FOMC) members, culminating in Friday’s crucial non-farm payrolls report, which will provide clear guidance on the Fed’s policy direction.

Technically, the (XAU/USD) shows a continuation of the limited downtrend, with the spot price confined within a clear parallel channel with a downward slope. The upper boundary of this descending channel coincides with the 100-period simple moving average (SMA), reinforcing the strong support zone near $3,300. However, it's worth noting that technical patterns point to immediate resistance and converging hurdles near $4,300. Meanwhile, momentum indicators paint a mixed picture: the Moving Average Convergence Divergence (MACD) has turned positive, while the 14-period Relative Strength Index (RSI) hovers around 44, suggesting stabilizing momentum and only a slight easing of short-term downward pressure, rather than a complete reversal of the overall downtrend. Therefore, market participants generally expect any intraday pullbacks to be viewed as selling opportunities, while the upside potential will be strictly confined to the range of the key moving averages. On the other hand, the lower boundary of the descending channel at $4,082 represents a key structural support level, and a decisive break below this level could pave the way for a broader and more pronounced short-term downtrend.