$4,200: Gold sellers to retain control below that level ahead of ISM PMI
- Gold struggles near $4,150 early Thursday, following the previous rejection above $4,200.
- US Dollar stands tall amid elevated Oil prices, higher Treasury yields, which offset a soft core PCE print.
- Gold holds below key support-turned-resistance near $4,175, with daily RSI still bearish.
Gold is trying hard to contain the downside, while trading close to $4,150 in Thursday’s Asian trading, having faced rejection above $4,200 on Wednesday. Focus now turns to a fresh batch of US economic data releases and speeches from Federal Reserve (Fed) policymakers for fresh hints on a possible interest rate hike in October.
Gold awaits more US data for Fed’s policy cues
Gold witnessed two-way price movements on Wednesday, swinging between gains and losses throughout the day before finally settling in the red.
Initially, the bright metal failed to capitalize on Tuesday’s late rebound amid a renewed uptick in oil prices, following reports that Qatar-mediated diplomatic talks between the United States (US) and Iran yielded little progress and that there could be chances of renewed conflict.
Elevated oil prices continue to stoke inflation concerns, keeping US Treasury bond yields underpinned across the curve. This narrative favors the ongoing upward trajectory in the US Dollar (USD).
However, the tide briefly turned in favor of Gold buyers after core Personal Consumption Expenditures (PCE) Price Index rose 3% year-over-year (YoY) in August, against expectations of a 3.3% increase.
The benign inflation data weighed heavily on October Fed rate hike bets, with markets now pricing in only a 38% chance of such a move from above 70% seen at the start of the week, according to the CME Group’s Fed Watch Tool.
That relief to Gold buyers was short-lived as upbeat US second-quarter Gross Domestic Product (GDP) and ADP private sector payrolls, and persistent oil-driven inflation risks and higher US Treasury bond yields weighed on the non-yielding bullion.
The US economy grew by 2.2% in Q2, beating the market forecast of 1.5%, while ADP private employment rose by 90,000 jobs last month after a downwardly revised 36,000 in August, and 70,000 expected.
Meanwhile, the benchmark 10-year US Treasury bond yields hit 5.31%, the highest level since mid-June 2007.
Amid the US-Iran stalemate, elevated oil prices and Treasury bond yields, risks remain skewed to the downside for Gold, with ‘sell-on-rise’ a good trading strategy in the lead-up to the US Nonfarm Payrolls (NFP) data due on Friday.
In the meantime, the US Jobless Claims, ISM Manufacturing PMI and Fedspeak will provide fresh cues on the Fed’s interest rate outlook, driving the USD, yields and bullion.
Kashkari questions policy tightness as resilient economy keeps Fed hawkish
Fed's Kashkari delivered a notably hawkish-leaning message, with a 7.1/10 FXS Speechtracker score standing above the 6.2/10 historical average, underscoring concern that inflation near 3% remains too high even as the economy proves resilient. By highlighting strong consumer spending, broad job availability, and the possibility that the neutral rate is higher and “elevated at least for now,” Kashkari reinforced the case for sustained restrictive policy and penciled in one more hike this year and another in 2027, while still expressing hope that only modest action will be needed to bring inflation down.
The FXS Fed Sentiment Index slipped by 0.42 points to 143.28, signaling a modest pullback in hawkish intensity even as the gauge remains firmly above the 100 neutral line. This configuration indicates that, despite a slight softening versus recent peaks, the Fed stance continues to reside in clear hawkish territory, consistent with Kashkari’s above-baseline FXS Speechtracker score and openness to further rate hikes.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $4,161.04, extending a corrective phase below all the major moving averages and keeping a bearish near-term bias in place. Spot is capped by a dense cluster of resistance formed by the 100-day simple moving average (SMA) at $4,282.90 and the descending trend-line barrier at $4,305.45, with the 21-day SMA at $4,308.54 and the 50-day SMA at $4,324.57 reinforcing the overhead supply. The Relative Strength Index (14) around 39 suggests waning upside momentum after the recent pullback from record highs, leaving gold vulnerable while it trades under these technical ceilings.
On the downside, the first meaningful support aligns with the rising trend-line base near $3,999.27, where buyers could attempt to defend the broader uptrend. As long as XAU/USD holds above this structural floor but remains below the stacked daily SMAs and the downtrend resistance line, price action is likely to stay constrained in a bearish-to-capped configuration, with any recovery attempts expected to struggle while those levels continue to act as resistance.
(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.
