Gold balances strong US data against geopolitical risks

Gold (XAU/USD) steadies on Thursday after briefly slipping on stronger-than-expected US economic data, as geopolitical risks lend support. Bloomberg reports that European diplomats privately warned Moscow they are prepared to shoot down Russian jets.

At the time of writing, XAU/USD is trading around $3,740, holding above session lows as the US Dollar (USD) and Treasury yields remain firm.

Initial Jobless Claims came in at 218K, beating expectations of 235K and down from 232K the previous week. At the same time, Q2 Gross Domestic Product (GDP) was revised higher to an annualized 3.8% from 3.3%, well above forecasts. Durable Goods Orders also surprised to the upside, surging 2.9% in August, while orders ex-defense climbed 1.9%, pointing to firm business investment.

Meanwhile, the core Personal Consumption Expenditures (PCE) Price Index included in the Q2 GDP report rose to 2.6% from 2.5%, slightly above expectations.

Recent remarks from Fed officials highlight the delicate balancing act of containing inflation while supporting employment, which explains their guarded approach to easing. Despite this, markets continue to anticipate another interest rate cut in October. At the same time, persistent geopolitical tensions and a supportive fundamental and technical backdrop are cushioning downside risks in Gold, keeping dip-buyers engaged.

Market movers: Gold holds range amid US Dollar strength and Fed watch

• Strong US Dollar and firmer Treasury yields weigh on Gold. The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major peers, is hovering around 98.42, its highest level since September 3, while US Treasury yields are edging higher across the curve.
• Fed President Austan Goolsbee said on Thursday that he is “somewhat uneasy with frontloading too many rate cuts” given signs of a cooling labor market and rising inflation. He added that rates “can go down a fair bit more if inflation heads toward 2%,” but stressed caution in the pace of easing.
• Fed Governor Michelle Bowman said that the labor market is becoming more fragile and argued it is “appropriate to shift to jobs instead of inflation.” She noted that the Fed is within range of its 2% inflation target and added that tariffs will have a one-time price impact, while stressing that policy can be adjusted to bring it closer to neutral to support employment.
• Speaking on Wednesday, San Francisco Fed President Mary Daly said she “fully supported” the Fed’s recent rate cut and that “moving forward, it is likely that further policy adjustments will be needed as we work to restore price stability while providing needed support to the labor market.” She added that the Fed’s projections “are not promises,” stressing the need to reassess policy as conditions evolve.
• Treasury Secretary Scott Bessent told Fox Business on Wednesday that rates “need to come down” and added he was “a bit surprised that the chair hasn’t signaled that we have a destination before the end of the year of at least 100 to 150 basis points. His remarks stand in sharp contrast to the Fed’s latest dot plot, which projected only another 50 bps of easing by year-end.

Technical analysis: XAU/USD stabilizes after pullback

XAU/USD is consolidating on the 4-hour chart after retreating from record highs, with immediate support aligned at Wednesday’s low of $3,717, followed by the $3,700 psychological level.

A deeper pullback could expose the 50-period Simple Moving Average (SMA) near $3,703 and the 100-period SMA at $3,657. On the upside, resistance is seen at $3,760-$3,765, with a breakout above this zone opening the door for a retest of the all-time high at $3,791.

The Relative Strength Index (RSI) is holding near 57, indicating that momentum has cooled from overbought territory but remains in neutral to positive territory.