FX.co ★ Der | XAU/USD, GOLD

The gold market (XAU/USD) showed remarkable resilience, extending its gains on Friday and rising slightly by about 0.89% to trade around $4,379, successfully recovering from its previous lows to a near two-month low of $4,235. This upward momentum was primarily driven by lower global oil prices, which helped offset the continued pressure from rising US Treasury yields and the Federal Reserve's hawkish stance. Risk appetite remained generally weak due to escalating geopolitical concerns surrounding the conflict in the Middle East, manifested in the ongoing military skirmishes between the US and Iran in the Persian Gulf and the active hostilities by the Houthi rebels against Saudi infrastructure in the Red Sea region. Recent reports that Houthi attacks forced the temporary closure of the East-West Arabian Oil Pipeline initially raised concerns about supply disruptions. However, the relatively lower price of West Texas Intermediate (WTI) crude oil limited the significant rise in the US dollar index to around 100.29, providing support for gold as a safe haven. Meanwhile, the macroeconomic landscape was heavily influenced by central bank decisions during a crucial week, most notably the Federal Reserve's unanimous 25-basis-point interest rate hike—its first monetary tightening in three years—bringing the benchmark interest rate range to 3.75%–4.00%. The accompanying projections in the bullet chart and comments from Fed officials, including Chairman Kevin Warsh, confirmed that returning inflation to 2% remains a top and uncompromising priority given the strength of the domestic economy, underscoring a firm and restrictive policy stance. Kansas City Fed President Jeffrey Schmid further reinforced this expectation, supporting the rate hike given inflation trends that have remained above 3%. As a result, financial markets quickly priced in a 55% probability of another interest rate hike at the next Federal Open Market Committee meeting in October, keeping the yield on the 10-year US Treasury note around 4.996%. Meanwhile, international monetary authorities took divergent paths, with the Bank of England keeping its benchmark interest rate unchanged at 3.75%, while the Bank of Japan raised its rate by 25 basis points to 1.25%. Domestically, secondary US economic data showed industrial production stagnating at 0% month-on-month in August, missing market expectations and further complicating the shifting economic landscape ahead of key economic data releases, such as the preliminary S&P PMI, durable goods orders, and the headline jobs report.

From a technical perspective, chart analysis shows that gold prices faced strong selling pressure after reaching an intraday high of $4,399 and continue to face psychological challenges near the $4,400 resistance level. Despite short-term hurdles, momentum indicators, such as the 14-day Relative Strength Index (RSI), have become more positive, suggesting continued strength in underlying buying demand following the recent rally. If spot precious metals prices can achieve a decisive and sustained break above $4,400, there will be an opportunity to challenge the next key technical and psychological levels at $4,450 and $4,500. Conversely, if sellers regain control and initiate a downward move, precious metals will need to break through key support levels—first the 100-day simple moving average around $4,320, then the 50-day simple moving average around $4,288, and finally the swing low near the key $4,235 level of September 16—to invalidate the current recovery framework.