Gold (XAU/USD) Daily Outlook Update Gold (XAU/USD) has failed to capitalise on yesterday's gains and remains range-bound, with modest gains or losses, early in Friday's Asian session. The greenback (USD) is trading near two-week lows as Fed Chairman Kevin Warsh, speaking at the annual IMF and World Bank Group Meetings, could not influence interest rate expectations. Speaking with the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, Warsh emphasised that the Fed had made it clear it would ensure price stability and that he does not prejudge meetings. Fed Chairman Warsh's speech received a 5.6/10 rating on the FXS Speechtracker, marginally below the established baseline of 6.1/10. While acknowledging being "over-scarred from the global financial crisis", Warsh discusses growth and investment in terms of "good policies", signalling a more careful approach while staying within the same framework. Warsh's emphasis on AI as a driver of near-term demand and a way to increase data confidence, along with consideration of negative tail-side risks, further supports this view. The FXS Fed Sentiment Index remained steady, rising 0.00 points to 127.51. In addition, the FXS Speechtracker came in at 98.26, suggesting that although this speech did not ratchet up expectations, it still reflected a very tight monetary policy stance. However, the energy-led acceleration in US inflation keeps bets on a near-term Fed hike in play. In a report on Wednesday, the US Bureau of Labour Statistics (BLS) noted a sharp rise in consumer prices in September amid continued tensions in the US-Israeli conflict with Iran, which have pushed oil prices higher. Additionally, last month's US Producer Price Index (PPI) reading rose 1.3%, the biggest jump since March 2022, while the annual reading spiked to 6.3%. Stripping out volatile food and energy items, the core PPI rose 0.7% and 5% on a monthly and annual basis, respectively. This suggests inflation is broadening beyond energy items. According to the CME Group's FedWatch Tool, market participants have assigned a well over 90% probability to another US interest rate increase at the next FOMC meeting in December. This, combined with rising tensions in the Middle East, helps keep the USD from losing much value and thereby limits upside for gold. Recent developments include an attack by Houthi rebels backed by Iran on the presidential palace in the southwestern city of Sana'a, Yemen, which serves as the seat of the government supported by Saudi Arabia. On top of this, reports say France has begun deploying its military resources in Saudi Arabia. Further to this, there have been strikes prepared by the US military, including the 'mother of all bombs', against the energy and nuclear facilities of Iran. This could further raise tensions in the Middle East. XAU/USD has yet to hold above the 100-SMA and remains below the 61.8% Fibonacci retracement of the July-August price rise. Nonetheless, the MACD indicator is above the zero line, signalling positive momentum for the bulls. The current RSI of 56 suggests a slightly favourable environment for price. However, we need a clear breakout above the $4,200 level and the 61.8% Fibo. Retracement at $4,238 to enter longs, targeting the 50.0% Fibo upside resistance levels. Retracement at $4,325 and the 38.2% level at $4,412. In a reversal, the nearest support level is the 78.6% Fibo level. Retracement is at $4,115, with support at the horizontal levels of $4,075-$4,065. If price breaks below the latter levels, gold may come under pressure to test the Fibonacci floor at $3,957.
