FX.co ★ Der | XAU/USD, GOLD

Gold (XAU/USD) continued its recent downward trend on Wednesday, marking its third consecutive day of declines and approaching the $4,100 level. Market participants adjusted their positions ahead of the release of key US Consumer Price Index (CPI) data. A slight weakening of the US dollar and stable US Treasury yields increased selling pressure on the non-yielding precious metal, prompting institutional investors to take profits after last week's technical rebound. Dollar buyers regained control of the market as global oil prices recovered amid escalating military conflict between Saudi Arabia and the Iranian-backed Houthi rebels in Yemen. Saudi Arabia launched a major airstrike on a strategic oil facility near Sana'a, while the Saudi military intercepted missiles fired by the Houthis at Saudi Aramco's energy assets in Dhahran, further deteriorating the regional security situation. Meanwhile, military strikes intensified in the Russian-Ukrainian conflict, with Russian missiles hitting a major power plant in Kyiv, violating a previously reached "energy ceasefire" agreement. This renewed concerns about global energy supplies, and consequently, the risks of inflation and rising sovereign bond yields. Amid these volatile economic and geopolitical conditions, precious metals traders are closely watching the release of the US Consumer Price Index (CPI) to gauge the Federal Reserve's anticipated interest rate path. Financial markets currently estimate a roughly 20% probability of an interest rate hike at the Federal Open Market Committee (FOMC) meeting scheduled for October. However, according to interest rate futures data tracked by the CME Group's FedWatch Index, the market anticipates a roughly 70% probability of a 25-basis-point rate increase in December. The market expects a 0.2% month-on-month increase in the core CPI for September, which would slightly raise the annual core inflation rate from 2.4% to 2.5%. As one of the last major macroeconomic data releases before the central bank's interest rate decision, a higher-than-expected Consumer Price Index (CPI) reading could reinforce market expectations of another Federal Reserve rate hike before the end of the year. This would raise US Treasury yields and boost demand for the dollar, thus putting downward pressure on gold prices. Conversely, lower-than-expected inflation data could dampen expectations of monetary tightening, leading to a weaker dollar and a fresh rally in the precious metals market. From a technical analysis perspective, the gold is currently trading around $4159.74, facing resistance from key moving average levels, suggesting a broader correction phase. The spot price is encountering resistance below the 21-day simple moving average (SMA) at $4216.32, while the 100-day SMA at $4249.66 and the 50-day SMA at $4337.43 are forming a strong upper support zone, influencing short-term price action to the downside. On the upside, the 200-day simple moving average at $4,525.40 indicates that long-term momentum remains weak. Technical indicators also reflect this weak technical situation, with the 14-day Relative Strength Index (RSI) hovering around 42.93, below the neutral midline, suggesting continued selling pressure but not yet pushing the price into oversold territory. On the upside, immediate dynamic resistance is centered around the 21-day moving average at $4,216, followed by the 100-day moving average around $4,250, and then the 50-day moving average around $4,337. A decisive break above all these moving averages would be needed for the daily closing price to reverse the current downtrend and signal a broader trend reversal. On the downside, the long-term uptrend line around $4,001.95 represents a key technical support level preventing further price declines. A sustained break below this level of structural resistance could lead to further selling towards deeper support zones; conversely, holding above $4001.95 will maintain a long-term positive framework despite short-term challenges.