Gold price (XAU/USD) registers modest gains on Wednesday as Oil prices edge lower after the US authorized the offloading of cargo from some blocked vessels, triggering a downside reaction in Oil markets. At the time of writing, XAU/USD trades at $4,133, up 0.25%, after bouncing off daily lows of $4,106.
XAU/USD recovers as falling Oil prices and steady Treasury yields support bullion
Bullion’s advance remains contained by an improvement in market mood, despite ongoing developments in the US-Iran war. Newswires reported that the Pakistani Army chief Asim Munir met with Iranian officials in Tehran, where he presented a “compromise proposal,” while N12 news reported that Munir delivered the US “final warning” to Tehran, meaning that if Iran does not agree to a peace deal, attacks could resume.
Al Hadath reported that Iran's Secretary of the Supreme National Security Council, Mohsen Rezaei, informed Munir of Iran's explicit rejection of the American demands.
Meanwhile, good news emerged about the Russia-Ukraine war, as the Kremlin agreed that a new round of trilateral talks among the United States, Russia, and Ukraine may take place in Abu Dhabi.
In the US, the economic docket remained scarce, but market participants are getting a nod from US equities, which continued to extend their gains amid a surge in technology stocks driven by AI hype.
Steady US Treasury yields are supporting Gold's advance. The US 10-year benchmark note is yielding 5.111%, flat, while the Greenback registers minimal losses.
The US Dollar Index (DXY), which measures the buck’s performance against a basket of six currencies, is down 0.05% at 101.67.
Gold’s advance also lies on what the Federal Reserve (Fed) might do in the foreseeable future. Markets are pricing in a 14% chance of a 25-basis-point hike in October, but the odds for December remain high at near 89%, according to Prime Terminal.
Fed interest rate probability - Source: Prime Terminal
Traders' eyes are shifting to next week's Fed meeting, along with the release of the US central bank's favorite inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index.
This week, traders are eyeing the release of US Initial Jobless Claims and the University of Michigan Consumer Sentiment for October.
XAU/USD technical analysis: Gold consolidates at around $4,100-$4,200
Gold price continues to trade sideways within the $4,100-$4,200 range for the sixteenth straight day. There is no clear bias, but the yellow metal has fallen nearly 26% from its record high near $5,600, indicating a mid-term downward trend.
Momentum, as measured by the Relative Strength Index (RSI), is bearish, but the index points modestly up, a mixed reading that suggests that further consolidation lies ahead.
Hence, XAU/USD’s path of least resistance is downwards. The first support is $4,100. A breach of the latter will expose the October 14 low of $4,073, followed immediately by the July 29 cycle low of $3,996. Below lies the July 17 low at $3,959 and the year-to-date (YTD) low at $3,941.
For a bullish reversal, XAU/USD faces resistance at $4,200, at the 100-day Simple Moving Average (SMA) at $4,235, at the 50-day SMA at $4,316 and at $4,500.
Gold daily chart
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