Gold (XAU/USD) Daily Outlook Update Gold (XAU/USD) shows some strength below the $4,000 level and bounces off its three-month lows from earlier this Friday. The commodity, however, fails to follow through and continues to trade at depressed levels heading into the European session. Officials from the US central bank have indicated that it does not need to hike interest rates anytime soon. Traders, however, still expect the US central bank to hike rates at its December policy meeting, with an approximate 80% probability. Oil-related inflation fears also support additional rate hikes. Indeed, oil prices have been hovering near a one-month high after hitting an upper bound on Tuesday, driven by a possible supply reduction amid growing tensions in the Middle East. This is due to the rising tensions between Saudi Arabia and the Iran-backed Houthis in Yemen. As such, Houthi groups' drones and missiles have been attacking Saudi Arabia's airstrips and energy facilities. In addition, the IRGC has indicated that the country would be ready for an invasion should there be any attack by the United States of America. This is in addition to news that the US and Israel have mapped out a plan for a brief but fierce military action against Iran after the US midterm elections and leaves the geopolitical risk premium in place. Furthermore, the Fed's bullish outlook supports a slight rebound in the safe-haven dollar from its three-week low, putting extra pressure on Gold prices. Traders may, on the other hand, choose not to enter new trades and wait for more signals on the Fed's direction. The FOMC two-day meeting next week will be the key event to watch. The Fed will make its decision known on Wednesday and is expected to keep interest rates stable. With no new economic outlook figures available, traders will focus on the Fed's statement and comments from Fed Chair Kevin Warsh at the post-meeting press conference. Thursday will bring advance US Q3 GDP data and the US Personal Consumption Expenditures (PCE) Price Index, the Fed's inflation measure. These figures will significantly impact the USD and boost gold. Failing to hold above a support level within a short-term trading range, along with a close below $4,100, was considered one of the triggers for XAU/USD bears. In addition, the Relative Strength Index is 34.34, slightly above the oversold level. At the same time, the Moving Average Convergence Divergence (MACD) remains below zero at -6.51, suggesting downward pressure persists despite some initial signs of stabilisation. However, the precious metal shows resistance below $4,000. Meanwhile, any attempt at a recovery will likely attract new sellers and fizzle out near the $4,065-$4,070 support level, which now acts as resistance. Next on the chart is the round number of $4,100, which, if taken, may spark a short-covering bounce and propel XAU/USD to $4,170. The XAU/USD pair must hold above $4,200 to validate the recovery scenario.
