Key Moments
- XAU/USD moved back above $4,300 while still trading close to the six-week low reached the previous day.
- The Federal Reserve signaled the likelihood of one additional rate hike this year, keeping Treasury yields elevated near the 5.0% level.
- Rising Middle East tensions and higher energy prices continued to bolster the US Dollar and constrained gold’s recovery potential.
Gold Edges Higher as Dollar Takes a Breather
Gold (XAU/USD) advanced on Thursday, reclaiming levels above $4,300 ahead of the European session after the US Dollar (USD) stepped back from a fresh high last seen in late July. The modest softening in the greenback offered some relief to the metal, which had traded near a six-week trough on the prior day.
Despite the bounce, bullion remained constrained by a combination of a firmly hawkish Federal Reserve outlook and ongoing geopolitical strains in the Middle East, both of which continued to support the safe-haven Dollar and curb demand for non-yielding assets such as gold.
Fed Delivers First Rate Hike Since 2023 and Signals More Tightening
The Federal Reserve concluded its September policy meeting on Wednesday with a unanimous decision to raise interest rates for the first time since 2023, an outcome that matched broad market expectations. Policymakers also adopted a more hawkish tone on the future path of policy.
The updated dot plot showed that Fed officials anticipate one additional rate increase before year-end. At the post-meeting press conference, Fed Chair Kevin Warsh said that the decision was led by a strengthening US economy, a lack of improvement in summer inflation trends, and geopolitics.
Warsh added that inflation is too high and has been for too long, while underscoring the importance of stabilizing consumer prices to grow the US economy. Persistently elevated energy prices continued to feed inflation concerns and reinforced expectations for further tightening, helping to keep US yields at elevated levels.
The yield on the benchmark 10-year US Treasury hovered near the 5.0% psychological threshold, close to its highest point since April 2007. Robust yields, together with geopolitical uncertainty, underpinned demand for the USD and limited the extent of gold’s recovery.
Geopolitical Tensions Support Safe-Haven Dollar and Oil
Developments in the Middle East remained a key theme for markets. Iran-backed Houthi rebels said that Saudi aircraft have carried out more than 450 air strikes across Yemen in the past week and claimed that they shot down a Saudi F-15 fighter jet over Marib province.
Meanwhile, US President Donald Trump claimed that Iran wants to strike a deal and that the war may be nearing its end. Nevertheless, intensifying fighting between the Houthi group and Saudi Arabia keeps the geopolitical risk premium in play, supporting oil prices. This favors USD bulls and warrants caution before positioning for further gains for the XAU/USD pair.
Technical Picture: Key Levels for XAU/USD
From a technical standpoint, gold maintained a bearish short-term structure while trading below a critical resistance band at $4,315-$4,320. This zone combines the 50% retracement of the June-August advance with the 100-day Simple Moving Average (SMA) and is likely to act as a key inflection point.
A sustained move above this confluence could open the door for a climb toward the 38.2% Fibonacci level near $4,404, followed by the 23.6% retracement around $4,513, and eventually toward the broader cycle high area at $4,690.
On the downside, initial support is located at the 61.8% Fibonacci retracement at $4,226. Below that, the next important zone is the 78.6% level at $4,100, with a more significant structural floor sitting near the previous swing low around $3,940.20.
Momentum indicators continued to reflect a corrective bias. The Moving Average Convergence Divergence (MACD) gauge remained below its signal line in negative territory, though the bearish histogram has been narrowing. The Relative Strength Index (RSI) hovered near 44, suggesting that downside momentum is fading but has not yet signaled a clear shift away from the prevailing corrective phase.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Performance Against Major Currencies
The table below outlines the daily percentage changes of the US Dollar against major counterparts, along with cross-moves among the other leading currencies. According to the data, the US Dollar was the strongest against the Canadian Dollar.
| Base \ Quote | USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|---|
| USD | – | -0.06% | -0.04% | -0.44% | 0.05% | -0.37% | -0.38% | -0.22% |
| EUR | 0.06% | – | 0.03% | -0.37% | 0.10% | -0.33% | -0.29% | -0.14% |
| GBP | 0.04% | -0.03% | – | -0.40% | 0.09% | -0.34% | -0.31% | -0.14% |
| JPY | 0.44% | 0.37% | 0.40% | – | 0.44% | 0.07% | 0.04% | 0.21% |
| CAD | -0.05% | -0.10% | -0.09% | -0.44% | – | -0.40% | -0.40% | -0.21% |
| AUD | 0.37% | 0.33% | 0.34% | -0.07% | 0.40% | – | 0.02% | 0.16% |
| NZD | 0.38% | 0.29% | 0.31% | -0.04% | 0.40% | -0.02% | – | 0.20% |
| CHF | 0.22% | 0.14% | 0.14% | -0.21% | 0.21% | -0.16% | -0.20% | – |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
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