FX.co ★ Fixy | XAU/USD, GOLD

Gold (XAU/USD) experienced a sharp reversal this week. Prices began strongly, climbing above $4,100 at one point, but subsequently plummeted to below $3,900—the lowest level since 2026—marking a cumulative weekly decline of over 4%. The early gains on Monday were driven by an easing of geopolitical tensions, following comments from U.S. President Donald Trump over the weekend that the likelihood of a new military strike against Iran was extremely low. Consequently, the price of West Texas Intermediate (WTI) crude oil fell by more than 4%, while gold rose by approximately 1.8%, closing above $4,100. However, this upward momentum came to an abrupt halt on Tuesday. During the European trading session, Federal Reserve Governor Christopher Waller warned that if the core Consumer Price Index (CPI) were to rise by 0.3% or more in October, a 50-basis-point (0.5 percentage point) interest rate hike might be necessary in December. Later, data released by the U.S. Bureau of Labor Statistics showed that both the headline and core CPI increased by 0.4% and 0.3%, respectively, in October compared to the previous month. This data pushed the yield on the benchmark 10-year U.S. Treasury note above 5.0%, driving the U.S. Dollar Index (DXY) up by more than 0.5% and causing gold prices to fall by over 2.5% in a single day. Mid-week, as Federal Reserve officials reiterated hawkish remarks, market expectations for aggressive monetary tightening intensified, placing further downward pressure on gold prices. Philadelphia Fed President Anna Harker scored 8.1 on the FXS Speechtracker—above her historical average of 7.6—and emphasized in her speech that policymakers would take tougher action should inflation worsen. She reaffirmed her preference for "gradual interest rate hikes" and maintaining a somewhat hawkish monetary stance. Following the Veterans Day holiday in the U.S. on Wednesday, U.S. Treasury yields resumed their upward trajectory on Thursday; the 10-year Treasury yield rose by more than 2%, surpassing the 5.1% level. Meanwhile, New York Fed President John Williams described inflation as "stubbornly persistent," while San Francisco Fed President Mary Daly warned that the prices of services remain elevated. The persistent rise in borrowing costs caused gold prices to fall by approximately 3% on Thursday, reaching around $3,850—their lowest level since October 2025. Strategists at ING noted that following remarks by Waller, yields on short-term U.S. Treasury bonds jumped by about 40 basis points. The market factored in expectations for consecutive interest rate hikes in December and January, amounting to a total monetary tightening of 85 basis points. They believe that, in the short term—barring a broad sell-off in U.S. technology stocks—the dollar’s ascent, driven by macroeconomic factors, is unlikely to stall.

Despite some buying support on Friday, which stabilized prices at around $3,900, the broader fundamental landscape remains highly unfavorable for non-yielding assets. With upcoming U.S. economic data limited to mid-tier indicators—such as retail sales and industrial production for October, alongside the minutes from the Federal Open Market Committee (FOMC) October meeting—market participants will be closely monitoring speeches by policymakers and geopolitical developments. According to the CME FedWatch tool, the market currently assigns an 87% probability to a 25-basis-point interest rate hike in December, and a 12% probability to a 50-basis-point increase. Furthermore, the market sees an approximately 70% chance of a cumulative rate hike of at least 50 basis points over the next two meetings. Strategists at TD Securities expect the dollar to continue receiving support from rising yields until the Federal Reserve’s hawkish stance reaches its peak, while developments in the Middle East’s energy sector continue to pose an inflationary risk—a factor with mixed implications for gold prices. From a technical perspective, the XAU/USD pair remains within the lower half of a bearish reversal channel that began in March, according to the daily chart. The price is currently trading below the 20-day simple moving average (SMA), while the 14-day Relative Strength Index (RSI) hovers around the 40 level. On the downside, immediate support is found at $3,850, with further support at $3,720 and the lower boundary of the channel at $3,600. Should the price attempt a rebound, initial resistance emerges between $3,990 and $4,025 (the channel’s midpoint and the 20-day SMA), followed by resistance at the 50-day SMA at $4,155, and subsequently the 100-day SMA at $4,200.