FX.co ★ XAU/USD, GOLD

XAU/USD is largely unchanged on the daily time frame and is trading just under $4,030 on Friday, after pulling back from 3-month lows near $4,000. The precious metals complex gets some support from the significant drop in US Treasury yields; however, gains are still capped as oil rose to new highs, prompting global central banks to tighten monetary policy. Yields on the US 10-year Treasury note fell 15 basis points Thursday, the biggest daily drop since 2023, amid worries about an AI bubble. In this regard, long-term Treasury rates are heading toward a three-week downtrend, easing the Fed's position by giving it breathing room to analyse the impact of the September interest rate hike. This move would make the yield-less precious metals more appealing. Conversely, oil prices are likely to remain a tough headwind to any meaningful gains in gold prices. Brent Oil is currently trading at a new five-month high at $110, while US WTI is above $100. XAU/USD is trading at $4,024.42 as price action continues within a bearish channel from the beginning-of-September highs. Nevertheless, the Relative Strength Index (RSI) has dropped to extremely oversold levels on the 4-hour chart, suggesting bulls may be exhausted and a bullish correction may occur soon. To the upside, bulls will likely face resistance first at $4,070 (previously provided support), then at Tuesday's and Wednesday's highs around $4,150, and in the area between $4,200 and $4,220, where rallies were limited several times in October. Below $4,000, bears will find strong support at the year-to-date lows between $3,960 and $3,941. Further below, the channel support is now around $3,925.