Gold Holds One-Week Low as Fed Outlook & Dollar Rule

Key Moments

Gold (XAU/USD) trades below $4,300, hovering near a one-week low ahead of the Trump-Xi meeting.
Fed rate hike expectations near a 70% probability for October and higher US yields continue to support the US Dollar.
Escalating US-Iran tensions have driven crude oil up by 3%, stoking inflation concerns and reinforcing the Fed’s hawkish stance.

Gold Holds Weak Tone Ahead of Trump-Xi Summit

Gold (XAU/USD) is trading under sustained pressure below the $4,300 level, lingering close to a one-week low reached earlier on Thursday. Market participants are focused on an upcoming meeting between US President Donald Trump and Chinese President Xi Jinping. While expectations for a sweeping breakthrough are limited, investors will be watching for signals on rare earths policy, technology-related restrictions, and a possible extension of the current US-China truce. Any unexpected developments could trigger volatility in the precious metal, even if the broader bias stays negative.

Fed Hike Odds and Strong Data Keep Gold Under Pressure

Upside attempts in gold remain constrained as expectations intensify for additional rate increases by the US Federal Reserve, a scenario that typically weighs on non-yielding assets like bullion. Data from CME Group’s FedWatch Tool show that markets are assigning nearly a 70% probability to another Fed rate hike in October.

Those expectations have been bolstered by survey data pointing to continued momentum in US business activity. A private survey reported that US output expanded for a fourth consecutive month in September. The S&P Global flash Composite PMI Output Index climbed from 56.0 in August to 58.4, marking its strongest reading since July 2021.

US-Iran Tensions Lift Oil, Reinforce Inflation Concerns

Geopolitical risk is also shaping the macro backdrop, with tensions between the US and Iran taking prominence at the United Nations General Assembly (UNGA). Trump warned that Iran faces a choice between diplomacy and “total destruction.” In turn, Iranian President Masoud Pezeshkian said that Iran will “never bend the knee,” while reiterating that Tehran remains open to a diplomatic resolution.

Pezeshkian emphasized that any agreement must involve lifting the US blockade that targets Iranian ports and maritime traffic around the Strait of Hormuz. These developments contributed to a 3% jump in crude oil prices, rekindling inflation worries and supporting market expectations of further Fed tightening.

Higher Yields and Strong Dollar Deepen Downside Risk for Gold

The perception that the Federal Reserve will maintain a hawkish policy stance has pushed the yield on the benchmark 10-year US Treasury note to its highest level since July 2007. At the same time, the US Dollar advanced to a nearly two-month peak on Wednesday.

The combination of higher yields and a stronger greenback supports the case for additional near-term weakness in gold prices. Still, the relatively muted price action advises caution for traders who are aggressively positioning for further declines. A decisive move below the monthly swing low near $4,235, reached last Wednesday, is viewed as necessary to confirm the bearish outlook and open the door to deeper losses.

XAU/USD – Technical Picture

The XAU/USD pair continues to trade beneath key technical reference points, reinforcing a negative tone for the metal.

Level / Indicator	Type	Comment
$4,316	50% Fibonacci retracement	Immediate resistance
$4,359	100-day EMA	Additional resistance above 50% retracement
$4,405	38.2% Fibonacci retracement	Upper boundary of clustered resistance
$4,227	61.8% Fibonacci retracement	Nearby support
$4,101	78.6% Fibonacci retracement	Secondary downside support
$3,940	Prior swing floor	Key lower support area
$4,235	Monthly swing low	Break below needed to reinforce bearish outlook

From a technical standpoint, gold remains capped under the 100-day Exponential Moving Average and the 50% Fibonacci retracement of the recent move. Momentum indicators confirm the loss of bullish traction: the Moving Average Convergence Divergence (MACD) indicator is in negative territory, while the Relative Strength Index (RSI) sits near the mid-range at 44.6. This configuration suggests that any rebound attempts are likely to face selling pressure as long as prices stay below the cluster of resistance levels.

On the downside, the 61.8% Fibonacci retracement at $4,227 offers the first layer of support. Below that, the 78.6% retracement at $4,101 and the previous swing low at $3,940 are seen as subsequent downside markers. On the topside, resistance is first located at the 50% retracement at $4,316, followed by the 100-day EMA at $4,359 and the 38.2% retracement at $4,405. A sustained move through this resistance zone would be required to alleviate the bearish bias and open the way toward $4,515 and $4,693.