XAU/USD is correcting after its previous rebound and is approaching the two-month low near $4,100.
The US Dollar strengthened on Wednesday as investors positioned ahead of the release of the Federal Reserve’s FOMC meeting minutes.
Higher oil prices, with Brent crude moving back above $100, provided additional support for the US Dollar.
Gold (XAU/USD) came under renewed selling pressure after rising on Tuesday, extending its broader downward trend as the US Dollar strengthened across the market ahead of the release of the Federal Reserve’s latest meeting minutes.
XAU/USD was trading below $4,120 after retreating from the $4,180 area reached on Tuesday, bringing the precious metal closer to its two-month low of $4,104.
The US Dollar Index (DXY), which measures the value of the US Dollar against a basket of six major currencies, recovered from earlier losses as investors became increasingly reluctant to sell the greenback ahead of the FOMC minutes.
Meanwhile, oil prices surged amid reports of renewed tensions in the Middle East. Higher energy prices put additional pressure on several major currencies competing with the US Dollar, particularly the Euro, while simultaneously supporting the greenback.
The Federal Reserve raised interest rates by 25 basis points at its September meeting, bringing the federal funds rate to a 3.75%-4.00% target range. Fed Chair Kevin Warsh also delivered a relatively hawkish message.
However, expectations for another rate hike in October have faded following weaker inflation and labor-market data, along with mixed comments from Federal Reserve policymakers.
Despite the decline in October rate-hike expectations, markets continue to anticipate another rate increase in December, with at least one additional hike potentially coming in early 2027.
Technical Analysis: $4,100 Support in Focus
XAU/USD was trading around $4,119, maintaining a bearish short-term bias while remaining below a descending trendline extending from the mid-August high.
Momentum indicators on the 4-hour chart also remain bearish. The Relative Strength Index (RSI 14) is holding below 40, while the Moving Average Convergence Divergence (MACD) remains in negative territory, both signaling continued downside pressure.
A decisive break below the medium-term low at $4,104 would expose the late-July and early-August lows around the psychological $4,000 level. A sustained decline below that area could then bring the year-to-date low near $3,941 into focus.
On the upside, Gold bulls need to reclaim and sustain gains above the descending resistance trendline, currently near $4,200, followed by the upper boundary of the two-week trading range around $4,227.
A sustained move above these resistance levels would strengthen the bullish case and shift attention toward the September 25 high near $4,310. Further gains could then target the September 11 and September 18 highs above $4,400.