FX.co ★ XAU/USD, GOLD

The price of gold (XAU/USD) on Friday experienced a violent sell-off, falling more than 3.3%, hitting a new low of $3,880 per ounce for the year, and falling below the key $3,900 level for the first time since October last year. Gold prices have been under multiple pressures: rising US Treasury yields; Continued safe haven flows into defensive assets amid deteriorating public risk appetite; And a series of hawkish comments from Federal Reserve officials has reinforced expectations that monetary policy will remain tight for an extended period. Technically, the drop below $3,900 exacerbated the overall technical collapse, especially with gold prices falling below the key horizontal support level formed on October 28, 2025 at $3,886. Fed officials' clear preference for further interest rate increases rather than easing monetary policy has severely hurt demand for gold, which does not earn interest. Specifically, Dallas Fed President Lori Logan clearly called for two additional interest rate increases; St. Louis Fed President Alberto Muslim believes current policy is too loose and called for an immediate increase in interest rates. Meanwhile, Richmond Fed President Thomas Barkin favored a more cautious, gradual approach, although he acknowledged that inflationary pressures continue to spread to the broader economy. Although the Fed's stance was clearly hawkish, the US Dollar Index (DXY) failed to take full advantage of it, and US Treasury yields consolidated slightly. Recent economic indicators support the need to tighten monetary policy: US GDP expanded strongly at an annualized rate of 3.4% in the third quarter, far exceeding previous market expectations; The core personal consumption expenditure inflation rate remained at 3.1% year-on-year, indicating strong stability. While these strong growth and inflation data briefly raised the possibility of further tightening, market pricing reflected in CME's FedWatch tool shows that traders' expectations for a December rate hike have fallen to around 70% - from 84% earlier this week (following the Fed's official policy statement). The continued rise in global energy costs has exacerbated the headwinds facing gold, with WTI prices rising towards $102 per barrel. Rising oil prices are exacerbating underlying inflationary pressures, driving up input costs and reinforcing the need for central banks to keep interest rates high — even as diplomatic negotiations between the US and Iran continue, Axios reports. Looking ahead to next week, market participants will release extensive economic data, including the Manufacturing and Services Purchasing Managers' (ISM) Index, JOLTS Job Openings, ADP Employment Changes, Initial Weekly Jobless Claims, and the closely watched October Nonfarm Payrolls report. From a technical perspective, gold prices fell decisively below the $3,900 level, creating a strong downtrend on the daily chart and opening the door for gold prices to fall further to the lowest 12-month range. Momentum indicators also confirm this downtrend: the 14-day Relative Strength Index (RSI) has fallen sharply and is approaching the oversold zone, indicating that the market is facing strong selling pressure, and this pressure is not yet showing signs of exhaustion. If the daily closing price of spot gold (XAU/USD) falls below the swing low ($3886) on October 28, 2025, the immediate target below will point to the correct support of $3800; If it breaks further, the key support area will be around $3,500 – this area was once an important swing high on April 22, 2025, and has now been converted into a support level. On the other hand, if bullish traders want to achieve an effective trend reversal, they must push gold prices back above the psychological levels of $3,900 and $4,000, thus paving the way for further rise to $4,100; Above this price, the 100-day simple moving average (SMA) is located at $4,213, forming upper dynamic resistance.