Gold (XAU/USD) has been unable to extend a modest intraday rally, and the price remains below the $4,150 level. The US dollar is supporting the bullish trend, limiting further upside for the precious metal and requiring caution when opening positions while awaiting a continuation of the recovery after the bounce from the two-month low reached yesterday.
The minutes of the FOMC meeting held on September 15–16, published on Wednesday, showed committee members unanimously decided to raise the federal funds target range and tilted toward further monetary tightening. Most participants said another rate hike may be needed this year to address persistent inflation. Despite the overall hawkish tone, expectations that the Federal Reserve will pause in October put some pressure on gold.
CME Group's FedWatch tool shows traders still price in roughly an 80% chance of a Fed rate hike in December. Furthermore, risks of more persistent inflation amid volatile energy prices are keeping US Treasury yields near multi-year highs. These factors, alongside ongoing geopolitical uncertainty from Middle East conflicts, also support the dollar (as a safe-haven asset) and curb a significant rise in the price of the precious metal.
According to recent reports, the Pentagon has instructed CENTCOM to finish preparations for a possible resumption of large-scale military action against Iran, while US President Donald Trump is reportedly considering specific strike dates. Sources in the US and Israel say these actions could occur before the US midterms and possibly before Israel's elections next week, increasing the risk of further escalation in the region. That creates conditions for dollar buying on dips.
Therefore, to confirm that gold has established a short-term bottom and to pave the way for further upside, a confident flow of buyers is required.
For better trading opportunities today, it may be prudent to wait for the weekly US initial jobless claims release; these data, along with speeches by influential FOMC members, will affect dollar dynamics. Geopolitical events may continue to drive volatility in global financial markets, creating short-term trading opportunities in XAU/USD despite the bearish backdrop.
Technically, gold is trading in the current range just above the round $4,100 support level. Resistance is provided by the 90-day EMA near $4,150. Above that, the $4,200 round number will act as additional resistance. Oscillators are negative, confirming the bears' advantage. Consequently, the path of least resistance is downward.