FX.co ★ Fixy | XAU/USD, GOLD

Gold (XAU/USD) rebounded from a three-month low of $3,986 during Friday's Asian trading session, but gains were capped by weak market sentiment and cautious buying that prevented further rises. Spot gold hovered around $4,002 after failing to hold onto its intraday high of $4,034, and is on track for a weekly decline of more than 3%. Thursday's market volatility exacerbated the impact of macroeconomic challenges. The S&P 500 fell 1.2% to $7,663, primarily driven by a sharp sell-off in semiconductor stocks, which boosted safe-haven demand and briefly pushed the yield on the benchmark 10-year US Treasury note below 5%, while the yield on the 2-year note fell below 4.75%. However, given the ongoing geopolitical tensions in the Middle East and West Texas Intermediate crude oil prices nearing a five-week high of $100 a barrel, which exacerbated concerns about global inflation, gold failed to benefit from lower yields. The persistently elevated inflation risk has reinforced market expectations that major central banks will maintain tight interest rate policies for longer, increasing the opportunity cost of holding non-income-generating assets and prompting some market participants to sell gold to offset broader equity losses. The macroeconomic outlook remains dominated by a stable dollar and resilient U.S. economic activity, providing strong support for a gold price recovery. The dollar index (DXY) edged up 0.11%, approaching 101.70, while the benchmark 10-year U.S. Treasury yield rebounded from Thursday's low of 4.95% to around 5%. U.S. macroeconomic data released on Friday presented a mixed but generally stable picture. The S&P Global Composite Purchasing Managers’ Index (PMI) for October fell to 57.6 from 58.4 in September. The manufacturing PMI unexpectedly rose to 56.0, exceeding expectations of 55.6, while the services PMI declined to 57.9, in line with expectations. Furthermore, the University of Michigan Consumer Sentiment Index was revised upward to 48.0 from 46.3, while one-year and five-year consumer inflation expectations remained unchanged at 4.7% and 3.5%, respectively, highlighting continued price pressures. Market attention is now focused on the upcoming Federal Open Market Committee (FOMC) monetary policy meeting. The market widely expects policymakers to leave the benchmark interest rate unchanged after raising it by 25 basis points in September. Investors will be closely watching how the Fed balances persistent inflation risks with growth concerns stemming from slowing corporate spending on artificial intelligence. Although the money market considers an immediate rate hike at next week's meeting unlikely, futures prices are pricing in an 80% probability of a 25-basis-point rate increase at the December meeting. Any hawkish guidance from Federal Reserve Chair Kevin Warsh, indicating continued monetary tightening, could increase selling pressure on gold as we enter the final quarter of the year.

Technically, the pair (XAU/USD) remains in a clear short-term bearish trend. After breaking the $4,100-$4,200 range that had held for several weeks, spot gold continues to face resistance below all major simple moving averages. Momentum indicators also support this bearish trend: the 14-day Relative Strength Index (RSI) is hovering around 35, approaching oversold territory; the Moving Average Convergence Divergence (MACD) is in deep negative territory; and the Average Directional Movement Index (ADX) is approaching 24, further reinforcing the bearish outlook. On the upside, initial dynamic resistance lies at the $4,100 level, followed by the 100-day simple moving average at $4,200 and $4,224. A sustained break above these levels would require testing the 50-day moving average at $4,302 and, ultimately, a move towards the upper boundary of the 200-day moving average at $4,509. Conversely, if the closing price falls below the key $4,000 level, the initial support level is at $3,950; further declines below this level could lead to a test of the structural targets at $3,900 and $3,800.