FX.co ★ MMC | XAU/USD, GOLD

The yellow metal (XAU/USD) cuts deep daily declines towards the monthly low level, but still carries bearish sentiment below the $4,100 mark during Thursday's early European session. The downtrend for the US Dollar (USD) prevails amid recent hints by the US Fed policymakers that there is no rush for the central bank to hike rates at the next October 27–28 gathering. Besides, US bond yields consolidate the retracement fall from the multi-year peaks, preventing any USD rally and providing some upside traction to the precious metal. In addition, the latest US inflation readings have validated expectations for the rate hike move by the US central bank. Actually, the CME Group's FedWatch Tool reveals that there is nearly a 90% possibility that the US Fed would hike rates in December. Moreover, the risks of inflation fueled by volatile oil prices bolster the outlook for more policy tightening from the Fed, which continues to undermine the yield-free Gold. Additionally, the geopolitical risks could cap losses for the safe-haven USD. Recent developments regarding the Middle East crisis have seen Iran's Foreign Minister, Abbas Araghchi, claim that the nation is ready for diplomacy while, at the same time, being prepared to defend itself. According to Araghchi, there was very little to look forward to due to the fact that the US was unwilling to come into any agreement. In addition, according to reports from The New York Times, the US and Israel have already laid down plans to undertake a short yet fierce military attack on Iran following the US midterm elections. This has been positive for the USD bulls. Additionally, the XAU/USD currency pair currently appears to be accepted below the $4,100 level, which again supports the case for a depreciation trend. The attention of traders will, therefore, be towards Thursday's release of the US Weekly Initial Jobless Claims. The XAU/USD pair continues to trade with a bearish short-term bias below the 200-period SMA on the 4-hour chart. Furthermore, the MACD indicator trades in the negative zone with the line below the signal, and the RSI oscillates in the mid-30s. Momentum indicators point to the continuing downward movement despite the fact that conditions are close to becoming oversold. That said, any subsequent weakness may see some support around the $4,075-$4,065 area, or the monthly swing low. Any follow-up selling would then be seen as a new impetus for bearish players and increase the likelihood of further declines toward the $4,030-$4,025 intermediate support with an eye on $4,000. On the contrary, the level of $4,140 can turn out to be an early resistance level above which the bullion may try to launch its assault on the $4,200 level. Breaking above the above-mentioned handle will push the Gold price towards the 200-period SMA level of $4,232, the breaking of which will take some downward pressure off and allow for a significant correction.