Gold reclaims $4,000 as weak USD fuels recovery from three-month low; FOMC remains in focus

• Gold finds some buying support, ending a two-day decline that had taken it to a three-month low.
• Bullion draws support as lower US bond yields restrain the USD’s attempted recovery.
• With central bank decisions and key US data due this week, XAU/USD bulls appear reluctant to commit.

Buying interest returns to Gold (XAU/USD) as the new week begins, lifting the metal above the psychological $4,000 level in the Asian session as the US Dollar (USD) weakens broadly. For now, the recovery appears to have ended the two-day slide to Friday’s three-month low, although scope for further gains looks restricted. A modest retreat in crude oil prices followed US President Donald Trump’s decision to rule out immediate military action against Iran. Federal Reserve (Fed) officials have also indicated that there is no immediate urgency to raise interest rates. Meanwhile, a sharp recent retreat in US bond yields from multi-year highs is limiting the USD’s attempt to recover from a three-week low, providing some support to the precious metal.

S&P Global’s flash US Manufacturing Purchasing Managers’ Index (PMI) reached a 53-month high of 56 in October, surpassing the expected 55.6. At 57.9, the Services PMI was in line with forecasts but below September’s 58.8. The Composite Output Index, meanwhile, eased to 57.6 after reaching a five-year high of 58.4 in the preceding month. The survey’s details also showed the output price index climbing to 59.8, its highest level since August 2022. This suggests inflation could rise further and stay persistently high over the coming months. Alongside inflation concerns linked to elevated energy prices, these figures support the prospect of further Fed tightening, potentially restricting any substantial gains in non-yielding Gold.

Supply worries arising from attacks in Saudi Arabia and tensions involving Iran had, in fact, pushed crude oil prices to their highest level since September 16. On Sunday, Yemen’s Iran-backed Houthis pledged to continue attacks on Saudi Arabia’s King Khalid Airport in Riyadh. With US-Iran negotiations also stalled, the geopolitical risk premium remains firmly in place. This could cushion the safe-haven US Dollar against deeper declines, calling for caution over aggressive bullish positions in gold. Market participants may also prefer to stay on the sidelines ahead of this week’s major central bank events and key US economic releases. Thursday brings the Advance Q3 GDP report and the Personal Consumption Expenditures (PCE) Price Index.

Wednesday’s conclusion of the two-day FOMC policy meeting will, however, be the main focus. With no updated economic projections due, markets will examine the accompanying rate statement and Fed Chair Kevin Warsh’s remarks at the post-meeting press conference for guidance on the future policy trajectory. Those signals will shape near-term USD movements. Rate decisions from the Reserve Bank of New Zealand (RBNZ), the European Central Bank (ECB) and the Bank of Japan (BoJ) are also due this week, potentially adding to Gold price volatility. Against this fundamental backdrop, it remains prudent to exercise caution before concluding that XAU/USD has found a bottom.

What does the XAU/USD 4-hour chart show?

Technical Analysis: Can Gold Overcome Resistance?

A bearish near-term bias remains in place after Gold broke below support near $4,100 at the lower end of a short-term trading range last week. Repeated recent attempts to clear the 100-period Exponential Moving Average (EMA) have also failed, reinforcing the negative outlook. The attempted rebound therefore appears to be a corrective move within a broader downward trend.

Further advances are consequently more likely to attract selling, with the former $4,100 support level expected to cap gains as resistance. Beyond that, the next barrier lies around the 100-period EMA at $4,135.95. A sustained break above this hurdle would be needed to turn the XAU/USD outlook more constructive and allow further gains towards reclaiming $4,200.

(The technical analysis of this story was written with the help of an AI tool. Know more.)