$4,200: Back in sight for Gold after Warsh’s silence on interest rate outlook
- Gold turns north toward $4,200 following Fed Chair Warsh’s neutral remarks.
- US Dollar faces renewed selling pressure as an October Fed rate hike is almost priced out.
- The daily RSI remains bearish, and Gold needs to decisively take out $4,200.
Gold is looking to build on its recent recovery, reverting toward $4,200 in the early European hours on Friday, as traders digest US Federal Reserve (Fed) Kevin Warsh’s neutral remarks delivered at the Fireside Chat with International Monetary Fund (IMF) Managing Director Kristalina Georgieva in Bangkok.
Gold fights for traction post-Warsh
Fed Chair Warsh made no comments on the central bank’s interest-rate hike path and only reiterated his commitment to restoring price stability. He explicitly said that “I don't believe in pre-judging meetings.”
Warsh’s speech scores 5.6/10 on the FXS Speechtracker, modestly below the 6.1/10 historical average, signaling a slightly less impactful tone relative to the established baseline. The admission of being “over-scarred from the global financial crisis” underscores a risk-aware bias even as Warsh stresses structural growth, an investment surge, and upcoming “crystalizing” decisions at the October and December meetings. Emphasis on AI’s demand-side impact, data confidence, and financial stability tail risks points to a forward-looking but cautious stance that keeps the Fed open-minded ahead of year-end policy calls.
The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a level of 127.51, which remains firmly in hawkish territory. The combination of a flat index reading and a below-baseline FXS Speechtracker score suggests that while the underlying policy bias stays hawkish, Warsh’s tone today added little incremental hawkish or dovish impulse for Dollar traders.
Markets continue to price in a roughly 22% chance of the Fed standing pat later this month, the CME Group’s FedWatch Tool shows.
Despite hotter-than-expected consumer and factory-gate inflation in the United States (US), the US Dollar (USD) came under fresh selling pressure lower after Warsh’s remark, with Gold attracting dip-buyers from the initial dip to the $4,150 region.
Meanwhile, US Treasury yields have entered a downside consolidation phase, supporting the bullion’s upside attempt.
However, looming geopolitical risks in the Middle East and elevated Oil prices remain a drag on non-yielding assets such as Gold.
Gold buyers were rescued by a Bloomberg report released on Thursday, stating that China is quietly piling on US Treasuries through non-US custodians, inflating Canada’s holdings to nearly $600 billion.
Looking ahead, Fedspeak, Middle East developments and the end-of-the-week flows will likely drive the Gold price action in the absence of any high-impact US economic releases.
It’s worth noting that the Fed enters the ‘blackout period’ on Saturday before the October 27-28 monetary policy meeting.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $4,173.86, holding a bearish near-term bias as price remains below the 21-day simple moving average (SMA) at $4,201.34 and the 100-day SMA at $4,242.23. The metal has retreated from recent highs and is now capped by a dense band of overhead moving-average resistance that includes the 50-day SMA at $4,331.59 and the 200-day SMA at $4,522.21, while the Relative Strength Index (14) around 46 hints at subdued bullish momentum within this corrective phase.
On the topside, initial resistance is seen at the 21-day SMA near $4,201, followed by the 100-day SMA at $4,242 and then the more meaningful barrier at the 50-day SMA around $4,332, ahead of the longer-term cap at the 200-day SMA near $4,522. On the downside, the next notable support emerges at the rising trend-line break area around $4,002, where buyers would be expected to defend the broader uptrend if the current pullback extends.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
