Gold Holds Above $4,100 as Markets Await US Inflation

Key Moments

Fundamental Drivers: Fed Outlook and Geopolitics

Gold (XAU/USD) trades slightly lower in early European dealings on Tuesday but continues to trade above the $4,100 level amid conflicting forces in the macro backdrop. Expectations that the US Federal Reserve (Fed) will continue to raise interest rates are encouraging flows away from non-yielding assets such as gold, weighing on prices.

The impact of those rate expectations, however, is being partially offset as the US Dollar (USD) struggles to attract sustained buying. Mixed signals around diplomatic efforts between the United States and Iran are contributing to cautious positioning, with market participants reluctant to take large bets ahead of key US consumer inflation data.

In the context of the Middle East situation, US President Donald Trump said that there was positive momentum toward ending the war on Iran, and that a resumption of strikes is quite unlikely, declaring the conflict effectively over. However, Mohsen Rezaei, Secretary of Iran’s Supreme National Security Council, dismissed reports of active negotiations as fake news and reiterated that Washington must accept Tehran’s seven conditions to end the conflict. These opposing statements keep a geopolitical risk premium present, which supports gold to some extent, though it is not translating into strong safe-haven demand for the USD.

Labor Market Data Reinforces Fed Tightening Expectations

US macroeconomic data released last Friday added to the case for further Fed tightening. The latest Nonfarm Payrolls (NFP) report showed that employment increased by 165K in October, topping even the highest forecasts. Additionally, job gains for August and September were revised up by a combined 84K.

The Unemployment Rate also moved lower to 4.1%, signaling ongoing strength in the labor market. This resilience supports the view that the Fed has room to continue raising rates. According to the CME Group’s FedWatch Tool, market participants are currently assigning more than an 80% probability that the US central bank will lift borrowing costs in December. That prospect is exerting downward pressure on gold prices.

Focus Turns to US CPI for Policy Guidance

Despite the stronger labor data and elevated expectations for a December rate hike, traders are reluctant to aggressively extend bearish positions in gold before the next key data release. Attention is firmly on the upcoming US Consumer Price Index (CPI) report, which is expected to be a major catalyst for USD price action and, by extension, for XAU/USD.

Given this backdrop, market participants are inclined to wait for clearer signals before concluding that the recent recovery off the $3,870 zone – the lowest level since September 2025, reached last month – has fully stalled. A more decisive break lower would be needed before positioning for a continuation of the broader decline that has unfolded over roughly the past two months.

Technical Overview: Supports, Resistances, and Bias

From a technical standpoint, the near-term tone for XAU/USD remains constructive. The pair has recently moved above both the 100-period and 200-period Simple Moving Averages (SMAs) on the 4-hour chart, a development that typically favors a bullish bias. Momentum indicators are also aligned with this view, with the Relative Strength Index hovering around 57 and the Moving Average Convergence Divergence (MACD) slightly in positive territory. These readings indicate that upward pressure is present but not yet extended.

On the downside, any further pullback is anticipated to encounter a series of technical support levels. The 200-period SMA on the 4-hour chart, located near $4,103, is seen as the first important floor. Below that, the 23.6% Fibonacci retracement at $4,059 offers another layer of support. A deeper decline would bring the 100-period SMA, around $4,042, into focus as a key level that would need to hold to maintain the current constructive setup.

To the upside, initial resistance is identified at the 38.2% Fibonacci retracement, situated close to $4,180. If buyers can push through this region, the next targets come in at the 50.0% retracement near $4,279 and the 61.8% retracement around $4,377. These levels collectively define the next set of bullish objectives should the advance extend.

Key Technical Levels for XAU/USD