FX.co ★ XAU/USD, GOLD

Gold prices (XAU/USD) fell sharply during early Asian trading on Friday, hitting their lowest level in over a year—approximately $3,880 per ounce—extending the steep decline that began earlier this week. Persistent concerns regarding inflation in the United States, coupled with expectations of rising interest rates, have placed significant pressure on the non-yielding precious metal. On Thursday, U.S. President Donald Trump stated that the United States does not require a diplomatic agreement with Iran; this effectively dashed hopes for a negotiated resolution to the conflict in the Middle East and intensified short-term downward pressure on gold prices. Following these remarks, oil prices climbed, reigniting market fears about energy-driven inflation. As noted by David Meger, director of metals trading at High Ridge Futures, rising energy costs justify the Federal Reserve’s hawkish stance, fostering a high-interest-rate environment that continues to act as a headwind for gold. Traders are now closely monitoring the release of the U.S. Producer Price Index (PPI) report for October, due on Friday, for further insight into wholesale price trends. The market generally anticipates a 6.6% year-on-year increase in the headline PPI for October, with the core PPI projected to rise by 5.0% year-on-year. Since the release of U.S. Consumer Price Index (CPI) data that exceeded expectations earlier this week, a series of negative fundamental factors has weighed on gold. These data have reinforced market expectations that the Federal Reserve will raise interest rates again at its scheduled December meeting. Following the release of this robust inflation report, Federal Reserve Governor Christopher Waller indicated that if core inflation continues to rise, a 50-basis-point interest rate hike should be considered. Consequently, the market-implied probability of a 50-basis-point rate hike in December—which stood at zero prior to Tuesday’s data release—has climbed to 14.5%. San Francisco Federal Reserve President Mary Daly further underscored this hawkish stance in her recent remarks; she scored 8.3 out of 10 on the FXS Speechtracker index—well above her historical average of 6.5—and warned that inflationary pressures remain tilted toward the upside rather than the downside. Daly views artificial intelligence as a structural driver of productivity and long-term price dynamics, rather than a cause of current inflation. She emphasized that strong economic growth, a stable labor market, and persistent inflation in the services sector necessitate a consistently hawkish monetary policy. Reflecting this hawkish sentiment among policymakers, the FXS Fed Sentiment Index rose by 1.01 points to reach 147.55, placing it firmly within the hawkish range. Factors supporting the US dollar’s performance against major currencies and commodity-linked currencies: Although multi-asset analysts at Deutsche Bank noted earlier this week that corporate credit has remained relatively stable on both sides of the Atlantic—and that a market retreat from artificial intelligence (AI) stocks, driven by risk aversion, led to a temporary decline in global sovereign bond yields and a weekly recovery in gold prices—subsequent upward pressure on core US interest rates has pushed the yield on the benchmark 10-year US Treasury note higher. From a technical analysis perspective on the daily chart, the spot gold price (XAU/USD) maintains a clear bearish structure in the short term; the spot price sits well below both the 100-day simple moving average (SMA) and the 20-day middle Bollinger Band. Gold prices are currently hovering above the lower Bollinger Band support level, signaling that bearish momentum remains dominant. The 14-day Relative Strength Index (RSI) stands at approximately 37.64—well below the neutral level of 50—indicating weak buying interest, though it has not yet reached oversold territory. On the upside, initial dynamic resistance is located at the middle Bollinger Band (approximately $4,038). A stronger resistance zone forms further up at the 100-day moving average ($4,200) and the upper Bollinger Band ($4,205). Conversely, current structural support lies near the lower Bollinger Band ($3,870). A decisive break below this key support level on the daily chart could trigger a deeper pullback. For the bulls to reverse the prevailing downtrend, they must reclaim the middle of the Bollinger Band.