FX.co ★ Der | XAU/USD, GOLD

Gold (XAU/USD) closed down about 0.10% on Friday, near $4,163 an ounce, and is likely to post a weekly decline. Market participants are analyzing this week's volatile economic data, dominated by unexpected US inflation figures and shifting central bank outlooks. Market sentiment this week was primarily influenced by the inflation report. The data showed that the Consumer Price Index (CPI) rose 3.7% year-on-year in September, exceeding market expectations of 3.6% and also higher than August's 3.4%; while the Producer Price Index (PPI) significantly beat expectations, registering a 6.3% year-on-year increase. Although the release of better-than-expected Consumer Price Index (CPI) data initially triggered market panic and raised the probability of an October Federal Reserve rate hike to 60%, market sentiment quickly shifted. Major investment banks and institutional analysts now consider a near-term Fed rate increase unlikely and have turned their attention to the possibility of monetary policy tightening at the Federal Open Market Committee (FOMC) meeting in December. According to Prime Terminal data, the market now anticipates only a 16% probability of a 25-basis-point rate hike at the October meeting, while expectations for a December rate increase are around 89%. Federal Reserve Chairman Kevin Warsh delivered a neutral public address, offering no clear guidance on the near-term interest rate path, which further influenced market sentiment. However, Warsh did acknowledge the potential resilience of the overall US economy. While gold has historically been considered an effective hedge against inflation, the continued rise in U.S. Treasury yields is putting resistance to the opportunity cost of non-income-generating assets, hindering a sustained recovery. The benchmark 10-year U.S. Treasury yield edged up 3 basis points to close at 5.106%, but this rise in sovereign bond yields did not provide broad support for the dollar, with the dollar index (DXY) slipping slightly by 0.10% to 101.87. Domestically, supplemental data released on Friday showed that U.S. industrial production rose 0.7% month-on-month in September, exceeding market expectations of 0.4% and the upward revision to the previous month's forecast of 0.1%. Looking ahead to next week's macroeconomic data, investors will be focusing on upcoming housing market indicators, weekly initial jobless claims, and the preliminary Purchasing Managers' Index (PMI). From a technical analysis perspective, the (XAU/USD) price continues to fluctuate within the familiar sideways range of $4,100 to $4,200, and appears to be finding temporary support near the lower boundary of this channel. Momentum indicators point to a complex technical pattern: while the 14-day Relative Strength Index (RSI) remains broadly bearish, a slight positive divergence is beginning to emerge, suggesting the potential for a technical reversal. For a decisive bullish reversal to occur, the spot gold price must successfully break above the psychological level of $4,200, paving the way for a subsequent test of the 100-day Simple Moving Average (SMA) at $4,242. Higher upside resistance levels lie at the 50-day SMA near $4,331 and the psychological level of $4,500. Conversely, if selling pressure intensifies, pushing the gold/US dollar pair (XAU/USD) below the immediate support level of $4,100, secondary bearish targets could emerge, including the October 14 low of $4,073, the July 29 cycle low of $3,996, the July 17 support level of $3,959, and finally the yearly low of $3,941.