Gold (XAU/USD) remains under heavy selling pressure for the second straight day, trading below the $4,000 psychological mark heading into Friday’s European session amid hawkish US Federal Reserve (Fed) expectations. US macro data on Thursday pointed to resilient economic growth and persistent price pressures, solidifying bets of an imminent Fed rate hike in December. This, in turn, is seen as undermining the non-yielding bullion and backing the case for further depreciation.
The preliminary estimate of third-quarter Gross Domestic Product (GDP) showed the US economic growth accelerated to an annualised rate of 3.4%, up from 2.2% in the previous quarter and beating the consensus forecast for a reading of 3.2%. Adding to this, the US Commerce Department reported that the Personal Consumption Expenditures (PCE) Price Index rose 0.5% in September and was up 3.6% from a year ago. Moreover, the core gauge, which excludes volatile food and energy prices, rose 0.3% and 3.1% on a monthly basis and yearly basis, respectively. This comes on top of inflationary concerns stemming from elevated US bond yields and underpins prospects for further policy tightening by the Fed.
Meanwhile, US Treasury yields tumbled as investors rushed into safe-haven government bonds after weak tech earnings raised concerns that rising AI spending may not deliver sufficient returns. Moreover, reviving hopes for a diplomatic solution to end conflicts in the Middle East dragged the safe-haven US Dollar (USD) lower for the third straight day, although it does little to ease the bearish pressure surrounding gold. In the latest developments, US Vice President JD Vance sent a direct letter to the secretary of Iran's Supreme National Security Council, Mohsen Rezaei, in an effort to restart peace negotiations. Furthermore, Qatar presented Iran with a new draft deal to end the war with the US and Israel.
However, investors remain wary amid escalating hostilities between the Iran-backed Houthi group in Yemen and Saudi Arabia. Furthermore, threats from the US and Israel to restart attacks after the US midterm elections keep the geopolitical risk premium firmly in play. Meanwhile, Iran's navy claimed Thursday that four oil tankers had struck sea mines in the Strait of Hormuz, adding to supply disruption worries and supporting oil prices. This backs the case for the emergence of USD dip-buying, suggesting that the path of least resistance for gold is to the downside and any recovery is likely to be sold into. Nevertheless, the XAU/USD pair remains on track to register a monthly loss of around 3.5%.
XAU/USD 4-hour chart
Technical Analysis
The precious metal extends its slide within a well-defined downward parallel channel, maintaining a negative near-term bias. Adding to this, the commodity trades below the 100-period Exponential Moving Average (EMA) on the 4-hour chart, which reinforces the bearish structure and should act as dynamic resistance overhead. Meanwhile, momentum indicators further validate the negative tone, with the Relative Strength Index (RSI) hovering near 35 and the Moving Average Convergence Divergence (MACD) line in negative territory. This, in turn, suggests that selling pressure remains dominant while rebounds are likely to be capped by nearby resistance.
On the downside, weakness below the previous monthly swing low, around $3,975, would expose the next notable support marked by the lower boundary of the descending parallel channel, around $3,946. A decisive break beneath this floor would be seen as a fresh trigger for bearish traders and open the door to deeper losses in the coming sessions.
On the topside, any attempted recovery is more likely to confront initial resistance at the $4,025-$4,030 horizontal zone, above which a bout of short covering could lift the Gold to the 100-period EMA around $4,093, ahead of the channel’s upper boundary near $4,126, forming a broader supply zone that would need to be reclaimed to ease bearish pressure.
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