FX.co ★ XAU/USD, GOLD

Gold (XAU/USD) faced a sharp sell-off on Thursday. The metal dropped by approximately 2.8% during the session, hitting a new low for the year at $3,852, before settling near $3,874. This intense selling was primarily driven by a significant market reassessment of monetary policy expectations; financial markets rapidly increased the probability of a 50-basis-point interest rate hike by the Federal Reserve at its December meeting. Several influential central bank officials made "hawkish" remarks, highlighting growing concerns regarding persistent inflationary pressures. Cleveland Fed President Beth Hammack indicated that inflation expectations are deteriorating. Chicago Fed President Austan Goolsbee emphasized that price growth remains stubbornly above the target, while San Francisco Fed President Mary Daly warned that further policy tightening is necessary, as inflation risks are skewed to the upside rather than the downside. This "hawkish" shift was further influenced by market dynamics, particularly a surge in benchmark energy prices. Driven by heightened geopolitical friction, the price of West Texas Intermediate (WTI) crude oil rose by 2.7% to reach $88.79 per barrel. Washington had previously issued a statement indicating that it does not rule out the possibility of military strikes, amid ongoing tensions in regional shipping lanes. The rise in energy costs immediately fueled concerns regarding a "compounding inflationary effect," providing further ammunition for the "hawkish" camp within the Federal Reserve. Consequently, the U.S. Dollar Index (DXY) climbed 0.34% to 103.48—a 19-month high—dealing a significant blow to non-interest-bearing precious metals. Meanwhile, despite some signs of weakness in domestic U.S. economic data—such as a slight uptick in initial jobless claims to 200,000 and a 5.5% decline in existing home sales to 3.75 million units—the prevailing market consensus remains unchanged: the U.S. labor market stays robust, necessitating a sustained, hawkish monetary policy.

From a technical perspective, gold prices have fallen below the $3,900 mark, leaving the XAU/USD pair in a vulnerable position. Momentum indicators, such as the Relative Strength Index (RSI), further confirm that the market remains under persistent downward pressure. Currently, there is immediate, strong technical support at $3,852—a multi-month low. Should the price fall below this level, the next support lies at the psychological threshold of $3,800, followed by a historical support level near $3,500, which was observed on April 22 (2025). On the upside, initial resistance lies at the psychological level of $3,900, followed by the intraday high near $4,000. For a more significant recovery, the price would first need to break through resistance above $4,100 and then challenge a dense technical resistance zone formed by the 50-day simple moving average ($4,165) and the 100-day simple moving average ($4,199). Currently, market participants are closely monitoring the upcoming Producer Price Index (PPI) data for October, seeking fresh directional clues regarding wholesale price trends.