FX.co ★ Crude | XAU/USD, GOLD

Gold (XAU/USD) edged slightly above the psychological $4,000 level during Asian trading on Monday, ending a two-day losing streak after hitting a three-month low of $3,975 on Friday. A weaker dollar provided a brief respite for spot gold prices, as US President Donald Trump ruled out immediate military action against Iran, which in turn led to a slight pullback in global oil prices. Meanwhile, Federal Reserve officials at this week's meeting indicated no urgent need to raise interest rates, and the recent decline in US Treasury yields from multi-year highs has limited any attempt at a dollar recovery, providing potential support for precious metals. However, upside potential remains very limited due to the strength of US economic fundamentals. Preliminary data from the S&P Global Survey showed the US manufacturing purchasing managers' index (PMI) rose to a 53-month high of 56.0 in October, exceeding expectations of 55.6, while the services PMI met expectations at 57.9. More importantly, the survey’s producer price index jumped to 59.8, its highest level since August 2022, suggesting that inflation is likely to accelerate and persist in the coming months. This reinforces expectations of continued monetary policy tightening by central banks and significantly reduces the appeal of non-yielding gold. Geopolitical developments in the Middle East continue to inject a sustained risk premium into global financial markets, limiting a sharp decline in safe-haven asset prices. Oil prices have remained stable near multi-month highs despite renewed military escalations, including Houthi drone and missile attacks on key energy and transport infrastructure in Saudi Arabia and Yemeni groups’ public threats to target King Khalid International Airport in Riyadh. Combined with the stalled diplomatic negotiations between Washington and Tehran, these geopolitical tensions have contributed to ongoing concerns about broader energy price inflation and have mitigated the dollar’s decline. Market participants have been extremely cautious, preferring to limit aggressive positions ahead of key central bank and US macroeconomic data releases later this week, including the third-quarter GDP report and the PCE price index, both due on Thursday. The conclusion of the two-day Federal Open Market Committee (FOMC) meeting on Wednesday will be the main macroeconomic catalyst for global asset classes. With no updated summary of economic projections, traders will be closely scrutinizing the official monetary policy statement and the press conference held by Federal Reserve Chair Kevin Warsh following the meeting, looking for clearer clues about the outlook for interest rates in December. CME FedWatch data shows that while the market expects interest rates to remain unchanged this week, it is pricing in a higher probability of a 25-basis-point increase at the December meeting. Furthermore, monetary policy announcements from the Reserve Bank of New Zealand (RBNZ), the European Central Bank (ECB), and the Bank of Japan (BoJ) this week could create a volatile environment across different asset classes. Given the strong underlying backdrop of rising energy prices and hawkish central bank responses, market analysts caution that Monday's gold rally has not yet confirmed that the spot price has reached its structural bottom. From a technical analysis perspective on the four-hour timeframe, the gold remains in a clear downtrend after decisively breaking below the multi-week support level around $4,100 last week. Recent price action has repeatedly failed to break above the dynamic resistance level above, confirming that the current upward attempt is still corrective within the existing downtrend. Any further intraday rally is likely to face strong selling pressure near the support-turned-resistance zone at $4,100, followed by secondary technical resistance near the 100-period exponential moving average (EMA) at $4,135.95. Buyers need to secure a sustained four-hour close above this moving average threshold to invalidate the current bearish structure and pave the way for a test of the $4,200 level. On the downside, a break below the support zone between $3975 and $3950 would reignite the downward momentum, setting structural bearish targets at $3900 and $3850.