FX.co ★ Crude | XAU/USD, GOLD

Gold prices edged higher ahead of Thursday's European trading session, climbing back above $4,300 an ounce after hitting a near six-week low amid sharp volatility the previous day, marking a technical rebound. A temporary weakening of the dollar contributed to this recovery, after it reached multi-week highs following significant macroeconomic events. However, the overall economic outlook remains a major challenge for non-yielding gold, as the Federal Reserve's hawkish policy stance and ongoing geopolitical conflicts in the Middle East continue to bolster the dollar's safe-haven appeal. The September monetary policy meeting, which concluded on Wednesday, strengthened the dollar and increased potential downward pressure on gold. The Federal Reserve voted unanimously to raise interest rates for the first time since 2023, raising the target range for the federal funds rate to 3.75%-4%. While the 25-basis-point rate hike was largely in line with market expectations, the subsequent policy statement and updated data revealed a significantly more hawkish stance, suggesting that Federal Reserve policymakers anticipate at least one more rate hike later this year. In the press conference following the meeting, Federal Reserve Chair Kevin Warsh emphasized that the decisive policy action was driven by unexpectedly strong domestic economic performance, persistently high inflation over the summer, and complex geopolitical factors. Furthermore, Warsh explicitly stated that sustained high inflation was critical, stressing that restoring long-term price stability was essential for sustaining economic growth. Continued pressure in the energy market and rising oil prices reinforced this hawkish outlook, pushing up overall inflation expectations and keeping U.S. Treasury yields near multi-year highs of 5.0%. At the same time, escalating geopolitical tensions—manifested in intensifying factional conflicts in the Middle East and persistent security concerns—have increased demand for safe-haven assets. Despite public pronouncements by politicians like US President Donald Trump in favor of lowering borrowing costs, the central bank’s commitment to curbing price pressures ensures that monetary policy tightening remains the focus of currency and commodity markets. Technically, as long as spot gold prices remain below the strong technical resistance level around $4,315 to $4,320, the precious metal will maintain a fragile short-term downtrend. This resistance level represents the intersection of the 50% Fibonacci retracement level of the June-August rally with the 100-day simple moving average. For gold prices to rise further, a decisive break above this key resistance level is needed to challenge the intermediate resistance levels around $4,404 and $4,513, with an ultimate target of the cycle highs around $4,690. Conversely, short-term support lies at the 61.8% Fibonacci retracement level around $4,226, while more secure support is found at the 78.6% Fibonacci retracement level around $4,100 and the previous low around $3,940. Meanwhile, momentum indicators, such as the MACD, remain in negative territory, with the chart showing a contraction, and the RSI hovering around 44, indicating weak downward momentum without a change to the current downtrend.