Key Moments
- XAU/USD trims intraday losses but remains under pressure below $4,100 during Thursday’s early European session.
- Technical signals and acceptance below $4,100 support the risk of further downside toward the $4,000 psychological level.
Gold Struggles to Rebound Despite Softer Dollar
Gold (XAU/USD) recovers from steep intraday declines after touching a new monthly low, yet continues to trade with a bearish intraday bias below $4,100 in early European dealing on Thursday. Persistent selling in the US Dollar (USD) follows recent comments from Federal Reserve (Fed) officials indicating no urgency to raise interest rates at the October 27-28 policy meeting. At the same time, US Treasury yields extend their pullback from multi-year peaks, undermining USD demand and offering only limited support to the precious metal.
Last week’s US inflation data reinforced expectations that the Fed is likely to raise rates later this year. According to the CME Group’s FedWatch Tool, market participants are currently assigning roughly a 90% probability to a December rate increase. Concerns that volatile oil prices could fuel further inflation support the case for additional Fed tightening, a scenario that tends to pressure non-yielding assets such as gold.
Even so, geopolitical tensions help sustain demand for the safe-haven US currency, restricting gold’s ability to capitalize fully on the weaker dollar and subdued yields.
Middle East Developments Support Dollar Bulls
On the geopolitical front, the situation in the Middle East remains in focus. Iran’s Foreign Minister, Abbas Araghchi, stated that the country is prepared for diplomacy while also emphasizing its readiness to defend itself. Araghchi added that there was little reason to expect progress now as the US had shown no willingness to reach an understanding.
Separately, The New York Times reported that the US and Israel have drawn up plans for a short but intense military campaign against Iran after the US midterm elections. This backdrop is seen as supportive for USD bulls and reinforces the risk of further downside in XAU/USD.
From a price perspective, gold appears to have established trading below the $4,100 round figure, reinforcing the argument for an extension of the prevailing downtrend. Market participants are now watching Thursday’s US Weekly Initial Jobless Claims release for fresh direction ahead of global flash PMIs on Friday. Nevertheless, the primary focus remains on next week’s FOMC meeting.
Technical Outlook for XAU/USD
XAU/USD maintains a negative short-term profile while trading beneath the 200-period Simple Moving Average (SMA) on the 4-hour chart. The Moving Average Convergence Divergence (MACD) indicator remains in negative territory, with the MACD line below its signal line, and the Relative Strength Index (RSI) fluctuates in the mid-30s. Together, these momentum readings indicate ongoing downside pressure even as conditions move closer to oversold levels.
On the downside, any additional weakness could encounter support in the $4,075-$4,065 band, which coincides with the current monthly swing low. A clear break below this zone and follow-through selling would likely encourage fresh bearish positioning, exposing the $4,030-$4,025 area as the next intermediate support before a potential test of the $4,000 psychological threshold.
On the upside, initial resistance is seen around $4,140. A move above this barrier could open the way for another attempt at the $4,200 level. A decisive push beyond that mark would bring the 200-period SMA, now near $4,232, into view. A sustained break above the 200-period SMA would relieve the prevailing bearish pressure and could pave the way for a more substantial corrective rebound in gold.
US Dollar Performance Over the Past Week
The table below shows the percentage change of the US Dollar (USD) against major currencies over the last 7 days. The US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.81% | -1.60% | -0.74% | -1.57% | -0.62% | -1.81% | -1.84% | |
| EUR | 0.81% | -0.83% | 0.02% | -0.85% | 0.19% | -1.01% | -1.08% | |
| GBP | 1.60% | 0.83% | 0.82% | 0.00% | 1.02% | -0.26% | -0.20% | |
| JPY | 0.74% | -0.02% | -0.82% | -0.76% | 0.16% | -1.06% | -1.05% | |
| CAD | 1.57% | 0.85% | -0.01% | 0.76% | 0.92% | -0.30% | -0.21% | |
| AUD | 0.62% | -0.19% | -1.02% | -0.16% | -0.92% | -1.20% | -1.19% | |
| NZD | 1.81% | 1.01% | 0.26% | 1.06% | 0.30% | 1.20% | -0.04% | |
| CHF | 1.84% | 1.08% | 0.20% | 1.05% | 0.21% | 1.19% | 0.04% |
The heat map reflects percentage moves of major currencies relative to one another. The base currency is taken from the left-hand column, and the quote currency from the top row. For instance, selecting the US Dollar from the left column and moving horizontally to the Japanese Yen cell shows the percentage change for USD (base)/JPY (quote).
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