Gold price (XAU/USD) tumbles to a near two-month low around $4,110 during the early Asian session on Thursday. A stronger US Dollar (USD) and elevated US Treasury bond yields reduce the appeal of the non-yielding metal. Traders will take more cues from the speeches of Federal Reserve (Fed) officials, including Christopher Waller and Alberto Musalem.
Technical Analysis
In the daily chart, XAU/USD remains under clear bearish pressure, as it holds below the 100-day simple moving average (SMA) and also below the Bollinger Bands’ middle line, keeping the broader trend capped. Price is hovering just above the lower Bollinger Band support, while the Relative Strength Index (14) at 37.09 slips toward oversold territory, hinting at persistent downside momentum rather than an imminent recovery.
On the downside, immediate support is located at the Bollinger Bands’ lower band near $4,070, where a sustained break would open the door to further declines toward lower psychological levels. On the topside, initial resistance comes at the Bollinger middle band at $4,250, followed by the 100-day SMA at $4,265; a daily close above these overlapping barriers would be needed to ease the bearish bias, with the upper Bollinger Band around $4,424.82 acting as a higher hurdle for any corrective bounce.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Fundamental Analysis
The benchmark US Treasury yields climbed again and are trading near their highest levels since 2002. Meanwhile, the greenback strengthened, making USD-denominated gold more expensive for holders of other currencies. A spike in oil prices also reignited concerns over inflation and the prospect of higher interest rates.
According to the Minutes from the last Fed meeting, policymakers were united in backing their September hike, and most officials assessed that another hike would be appropriate by year-end.
Markets are largely expecting the US central bank to keep interest rates on hold later at its October policy meeting but are still pricing in a 78.3% probability of a December increase, according to CME's FedWatch tool.
"I think the message is rates are going to continue to be higher for longer, and that's keeping yields and the dollar underpinned," said Peter Grant, vice president and senior metals strategist at Zaner Metals.
Gold finds support as PBoC buying and ETF inflows offset cta pressure
According to TD Securities, “precious metals come under heavy selling pressure, with CTAs selling gold, silver and platinum,” leaving the complex on the defensive as “the yellow metal is on the back foot again this morning amid surging real rates and a stronger Dollar.” Even so, the bank argues that “we expect a strong dip buying impulse for gold in particular as longer-term drivers and flows remain supportive,” pointing to the fact that “ETF accumulation continues and the PBoC reported a 23rd consecutive month of central bank buying, with another 23 tonnes in September.”
TD Securities highlights that “a continued bid from discretionary traders, ETFs, and central banks all combine to provide a strong floor for gold,” with the underlying “drivers of these flows” ranging from “geopolitical risk, fiscal concern, Dollar debasement, de-dollarization and stagflation concerns.” In their view, “we expect the appetite to be more persistent and ultimately hold firm in the face of surging real rates,” and “continue to see the stage being set for gold to disconnect from real rates further and begin a new bull run into 2027.”
Fed’s Schmid flags AI-driven inflation and signals more short-rate tightening
Fed’s Schmid delivers a notably hawkish tone, with an 8/10 FXS Speechtracker score standing above the 7.5/10 historical average, underscoring a stronger-than-usual focus on inflation risks. The emphasis that inflation is “frustrating” and “must be fixed,” alongside the assertion that AI is now one of the largest drivers of inflation and that the Fed’s credibility is at stake, reinforces a message of persistent price pressures and a readiness to act. The comment that the Fed still has work to do on the short rate despite higher long-term yields signals a bias toward keeping policy tight or tightening further, a backdrop typically supportive of the Dollar and a headwind for risk-sensitive currencies.
The FXS Fed Sentiment Index rose by 0.34 points to 137.91, keeping the gauge firmly in hawkish territory well above the neutral 100 mark. This incremental move higher, aligned with the above-baseline FXS Speechtracker score, confirms that Fed communication is tilting more hawkish at the margin, reinforcing expectations for sustained restrictive policy.
XAU/USD Forecast Poll
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Gold (XAU/USD)
In the Forex market, Gold functions as a currency. The particularity of Gold is that it is traded against the United States Dollar (USD), with the internationally accepted code for gold being XAU.
Known as a safe-haven asset, Gold is expected to appreciate in periods of market volatility and economic uncertainty. 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. The United States is the country that holds the biggest resources of Gold in the world.
The XAU/USD pair tells the trader how many US Dollars are needed to purchase one troy ounce of Gold.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold prices escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher borrowing costs usually weigh on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars. A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Organizations that influence XAU/USD
- WGC (World Gold Council) is the market development organization for the Gold industry. Its aim is to stimulate and sustain demand for the precious metal.
- LBMA (London Bullion Market Association) is an organization whose members participate in this wholesale over-the-counter market for trading Gold and Silver. It is loosely overseen by the Bank of England. Most LBMA members are major international banks, bullion dealers, and refiners.
- COMEX (Commodity Exchange) is the primary market for trading metals. The COMEX merged with the New York Mercantile Exchange (NYMEX) in 1994 and joined the CME Group in 2008.
- CGSE (Chinese Gold and Silver Exchange Society) is an organization of Gold trading firms in Hong Kong that are participants of the Chinese Gold and Silver Exchange, the first exchange in Hong Kong.
- Central banks like the Federal Reserve (Fed), the European Central Bank (ECB) or the People's Bank of China (PBoC) significantly influence Gold prices through their monetary policies.
People that influence XAU/USD
- Neal Froneman, the World Gold Council's Chairman.
- Scott Bessent, the US Treasury Secretary.
- Xi Jinping, President of the People's Republic of China.
- The London Bullion Market Association members.
Circumstances that influence XAU/USD
The main variables traders should monitor to understand Gold's position are:
- Demand and supply: The balance between global Gold demand and its availability impacts its price.
- Economic uncertainty and currency devaluation: Gold is widely known as a safe-haven asset for investors in periods of economic uncertainty or when a currency faces devaluation.
- Practical applications: The use of Gold in technology innovations, jewelry manufacturing and other industrial applications.
Assets that influence XAU/USD
- Currencies: The US Dollar (USD) and the Euro (EUR) are the primary currencies influencing Gold prices. Other important currency pairs include EUR/USD, GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD, and USD/CAD.
- Commodities: Silver and Gold are the most important precious metal commodities.
- Bonds: Influential fixed-income securities include the German Bund (a federal government-issued bond) and the US Treasury Note (T-Note).
- Indices: Key indices related to Gold and mining include the HUI (NYSE Arca Gold BUGS), the XAU (Philadelphia Gold and Silver Index) and the GDM (NYSE Arca Gold Miners Index).
- Exchanges: The most important stock exchanges for Gold are the New York Mercantile Exchange (COMEX), the Chicago Board of Trade, the Euronext/LIFFE, the London Bullion Market, the Tokyo Commodity Exchange, the Bolsa der Mercadorias e Futuros and the Korea Futures Exchange.