Gold Under Pressure

Strong U.S. Data Weighs on Gold as Diplomacy Hopes Ease Geopolitical Concerns

Gold Market Drivers

Gold prices remained under pressure as the benchmark U.S. 10-year Treasury yield decisively broke above the 5% level, a key psychological threshold that had previously only been briefly tested before retreating. The move began during the European session and extended into New York trading, while the U.S. dollar strengthened for a third consecutive day.

The primary catalyst behind the latest selloff was a surprisingly strong set of U.S. PMI data. Both manufacturing and services activity exceeded market expectations by a wide margin, reinforcing confidence in the strength of the U.S. economy while raising concerns about persistent inflation.

The Services PMI surged to 58.7, significantly above the 55.8 forecast and higher than the previous reading of 56.5. Meanwhile, Manufacturing PMI climbed to 57.0, beating expectations of 53.6 and improving from 53.9 previously.

The stronger-than-expected economic data boosted Treasury yields and supported the U.S. dollar, creating additional headwinds for gold prices.

U.S. Treasury Yield Breaks Above 5%

The breakout in Treasury yields has become a major concern for financial markets. The move comes despite the U.S. Treasury Department's announcement of a $6 billion bond buyback program earlier this month, suggesting that investors remain unconvinced the measure is sufficient to stabilize the bond market.

Following the strong PMI data, market expectations for a Federal Reserve rate hike in October increased to around 65%. Higher interest rate expectations have prompted investors to demand greater returns for holding U.S. government debt, driving yields higher across the curve.

Market participants are now closely watching the next steps from the Treasury Department and policymakers as bond market volatility intensifies.

Middle East Outlook Remains Uncertain

Geopolitical risks continue to influence market sentiment. Brent crude oil climbed back above $100 per barrel, while WTI crude remained relatively subdued near $92 per barrel.

The rebound in oil prices highlights how quickly geopolitical risk premiums can return when hopes for a peace agreement fade, even as additional oil supplies from Saudi Arabia and Iraq increasingly bypass the Strait of Hormuz.

On the diplomatic front, the United States and Iran recently held a three-hour meeting, with both sides describing the discussions as constructive. Iran reportedly maintained demands similar to those outlined in the June memorandum of understanding, though uncertainty remains over whether Washington is prepared to accept the terms.

President Donald Trump indicated that a comprehensive agreement may not be reached until after the November midterm elections, tempering expectations for a near-term breakthrough.

While there has been no significant escalation in tensions, investors remain cautious due to the lack of a formal agreement. Nevertheless, the commitment by both sides to continue diplomatic discussions has helped reduce fears of a major disruption in the Strait of Hormuz.

Key Economic Events to Watch

Investors are now focused on upcoming U.S. economic releases, including Initial Jobless Claims and New Home Sales data.

Stronger-than-expected results could reinforce expectations of additional Federal Reserve tightening and place further pressure on gold prices. Conversely, weaker economic data may support a rebound in bullion by reducing expectations for future rate hikes.

Markets are also monitoring the meeting between Chinese President Xi Jinping and U.S. President Donald Trump. Treasury Secretary Scott Bessent recently suggested that both countries are broadly aligned on extending the current trade truce through January 2027, potentially easing tariff-related inflation concerns.

Any additional agreements emerging from the summit could significantly influence market sentiment and global economic expectations.

Gold Technical Analysis

Daily Chart

Gold closed the daily session in bearish territory after once again failing to break above the 100-day Exponential Moving Average (EMA) near $4,360. The metal also ended the session below the 200-day EMA around $4,319, reinforcing downside risks.

Technically, sustained trading below $4,250 could expose support zones at $4,223–$4,200. In a more bearish scenario, gold could extend losses toward the critical support region between $4,106 and $4,223.

The September 16 low near $4,235 remains an important psychological support level. As long as prices hold above this area on a closing basis, buying interest may gradually emerge and support a recovery toward the $4,300 region.

However, a confirmed daily close below $4,235 would strengthen the bearish outlook and increase the likelihood of a move toward $4,200 or even $4,106.

H4 Chart

On the four-hour timeframe, gold failed to sustain gains above $4,360 after reaching an intraday high of $4,369 during the early Asian session. Prices were unable to revisit the resistance zone for the remainder of the trading day and instead moved sharply lower following the release of stronger-than-expected U.S. PMI data.

The surprisingly robust manufacturing and services readings accelerated selling pressure, pushing gold down to an intraday low near $4,274.

With momentum favoring the downside, traders will continue to monitor economic data, Treasury yields, Federal Reserve expectations, and geopolitical developments for the next major directional move in gold.

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Gold Futures Lower

 

Gold Futures Edge Lower During Asian Trading Session

Gold futures traded lower during Asian market hours on Tuesday as investors remained cautious amid ongoing uncertainty surrounding interest rate expectations and global economic conditions.

On the Comex division of the New York Mercantile Exchange, December gold futures were trading at $4,366.87 per troy ounce at the time of writing, down 0.39% on the session.

The precious metal earlier touched an intraday low, reflecting continued pressure on bullion prices. Technical indicators suggest that gold could find immediate support near $4,294.50 per ounce, while resistance is seen around $4,439.80 per ounce.

U.S. Dollar Weakens Slightly

The U.S. Dollar Index Futures, which measures the greenback against a basket of six major currencies, slipped 0.08% to 100.07.

A softer dollar generally provides support for gold by making the metal more affordable for holders of other currencies. However, traders remain focused on Federal Reserve policy signals and broader market sentiment, which continue to influence precious metal prices.

Silver Falls While Copper Advances

Elsewhere in the commodities market, December silver futures declined 0.26% to $66.24 per troy ounce.

Meanwhile, December copper futures gained 0.45%, trading at $6.82 per pound, supported by expectations of industrial demand and improving market sentiment toward base metals.

Market participants are expected to closely monitor upcoming economic data releases, central bank commentary, and geopolitical developments for further direction in gold, silver, and copper prices.

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Venezuela Gold Deal

Venezuela Nears Deal to Transfer $4 Billion Gold Reserves to the United States

Venezuela’s government and opposition are reportedly close to finalizing an agreement to transfer the country’s central bank gold reserves from the Bank of England to the Federal Reserve Bank of New York, according to a Financial Times report published on Friday.

The gold holdings are estimated to be worth approximately $4 billion.

Under the proposed agreement, legal control of the gold would be transferred to an interim government led by Delcy Rodríguez. However, the government would not be permitted to sell the gold reserves directly, the report said, citing four people familiar with the negotiations.

Instead, the gold could be used as collateral for government borrowing to help finance public spending, including reconstruction efforts following the devastating twin earthquakes that struck the country in June.

Seven-Year Gold Dispute Nears Resolution

The agreement would bring an end to a seven-year legal and political dispute over Venezuela’s gold reserves that began in 2019.

The conflict emerged after the United States, the United Kingdom, and several other governments recognized opposition leader Juan Guaidó, then president of Venezuela’s National Assembly, as the country’s legitimate leader. The recognition created competing claims over control of Venezuela’s overseas assets, including the gold stored in London.

The proposed transfer to the Federal Reserve Bank of New York is seen as a potential breakthrough in resolving one of the most significant international asset disputes involving Venezuela.

Gold Reserves Could Support Reconstruction Efforts

If finalized, the agreement would allow Venezuela to leverage its gold reserves without directly liquidating them. Using the bullion as collateral could provide access to financing needed for economic recovery and infrastructure rebuilding following recent natural disasters.

The development also highlights the continued strategic importance of central bank gold reserves, which many countries view as a critical source of financial stability and emergency liquidity during periods of economic stress.

As negotiations move toward completion, investors and policymakers will be closely watching the outcome and its potential implications for Venezuela’s financial recovery and international relations.

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Gold Gains Limited

Gold Price Rises but Upside Remains Limited Amid Hawkish Fed Outlook

Gold prices extended their intraday recovery during the first half of the European session on Thursday, building on a rebound from the nearly six-week low reached a day earlier. A modest pullback in U.S. Treasury yields triggered some profit-taking in the U.S. dollar, offering support to the precious metal. However, a hawkish Federal Reserve outlook and escalating tensions in the Middle East are expected to limit further weakness in the safe-haven greenback and cap gains in non-yielding gold.

Gold Technical Outlook Remains Bearish

Despite the latest rebound, gold continues to maintain a short-term bearish bias below the key resistance zone between $4,315 and $4,320, which includes both the 50% Fibonacci retracement of the June–August rally and the 100-day Simple Moving Average (SMA).

This area is viewed as a critical pivot point. A sustained move above it could open the door for a rally toward the 38.2% Fibonacci retracement near $4,404, followed by the 23.6% retracement level at $4,513, and potentially the broader cycle high around $4,690.

On the downside, immediate support is located at the 61.8% Fibonacci retracement near $4,226. Additional support levels are seen at the 78.6% retracement around $4,100 and the previous swing low near $3,940.20.

Momentum indicators suggest bearish pressure is easing but remains intact. The MACD continues to trade in negative territory, with the signal line still below the MACD line, although the bearish histogram is narrowing. Meanwhile, the Relative Strength Index (RSI) is hovering near 44, indicating weakening downside momentum without yet signaling a reversal of the broader corrective trend.

Hawkish Fed Signals Further Tightening

The Federal Reserve unanimously approved its first interest-rate increase since 2023 at the conclusion of its September policy meeting on Wednesday. The decision matched market expectations and was accompanied by a more hawkish policy outlook.

The Fed’s updated dot plot showed policymakers anticipate at least one additional rate hike before the end of the year. Speaking after the meeting, Fed Chair Kevin Warsh said the decision was driven by continued strength in the U.S. economy, a lack of meaningful improvement in inflation trends over the summer, and ongoing geopolitical risks.

Warsh emphasized that inflation remains too high and has persisted for too long, underscoring the central bank’s commitment to restoring price stability. He also highlighted the inflationary risks posed by elevated energy prices, reinforcing expectations that further monetary tightening may still be necessary.

As a result, U.S. Treasury yields remain elevated, with the benchmark 10-year Treasury yield holding near the psychologically important 5.0% level, its highest reading since April 2007. Higher yields, combined with geopolitical uncertainty, continue to support the U.S. dollar.

Middle East Tensions Support Safe-Haven Demand

Geopolitical developments remain in focus after Iran-backed Houthi rebels claimed Saudi aircraft conducted more than 450 airstrikes across Yemen over the past week and alleged that a Saudi F-15 fighter jet was shot down over Marib province.

Meanwhile, U.S. President Donald Trump stated that Iran is seeking a deal and suggested the conflict could be approaching an end. Nevertheless, intensifying clashes between the Houthis and Saudi Arabia continue to fuel geopolitical risk premiums and support oil prices.

Rising energy prices and persistent geopolitical uncertainty are helping sustain demand for the U.S. dollar as a safe-haven asset, suggesting traders may remain cautious about expecting a sustained bullish breakout in gold prices in the near term.

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Gold Eyes Fed

Gold Rebounds Toward $4,350 Ahead of Fed Decision as Rate Hike Expectations Remain Elevated

Gold prices rebounded on Wednesday after posting losses for two consecutive sessions, climbing toward $4,350 per ounce as investors positioned themselves ahead of the Federal Reserve’s policy decision later in the day.

Elevated oil prices and rising U.S. Treasury yields continued to highlight inflation risks, while markets priced in roughly a 92% probability of a Federal Reserve interest rate increase.

As of 09:31 WIB, XAU/USD rose 0.8% to $4,326.44 per ounce, while Gold Futures gained 0.8% to $4,366.50. Silver (XAG/USD) advanced 1.4% to $64.59 per ounce, while platinum (XPT/USD) climbed 0.7% to $1,792.43. The U.S. Dollar Index remained nearly unchanged at 99.57.

Oil Prices and Treasury Yields Strengthen Fed Rate Hike Expectations

Gold has fallen more than 3% in September after trading above $4,700 per ounce in late August, as traders repeatedly adjusted their outlook for U.S. monetary policy. Wednesday’s rebound pushed spot gold back above the $4,300 level, although the precious metal remains well below its late-August highs.

Broader pressure has come from elevated energy prices and rising borrowing costs. Oil prices stabilized after two consecutive gains, while uncertainty surrounding the duration of the shutdown of Saudi Arabia’s East-West pipeline kept energy markets on edge.

The pipeline was attacked last week and had previously transported millions of barrels of crude oil per day to bypass disruptions in the Strait of Hormuz. Saudi Arabia has yet to indicate how long the shutdown may last or how quickly exports through Hormuz can be increased to offset the disruption.

Saudi Aramco has also delayed several shipments to European customers, adding to concerns about global supply availability.

Energy-related risks have spilled over into bond markets. The benchmark U.S. 10-year Treasury yield briefly touched 5.04%, its highest level since 2007, after rising as much as five basis points on Tuesday.

The move is part of a broader global bond selloff driven by strong capital spending and surging energy prices, both of which are contributing to inflationary pressures.

Higher Treasury yields typically weigh on gold because the precious metal does not generate interest, making income-producing assets more attractive to investors.

Fed Decision and Technical Levels Remain Key Focus

Markets are currently assigning a roughly 92% probability to a Federal Reserve rate hike, with traders expecting the central bank to deliver its first increase since 2023.

However, a rate hike is not the only risk facing bonds and gold. If the Fed leaves rates unchanged or Fed Chair Kevin Warsh refrains from signaling additional tightening, investors may demand higher yields on longer-dated Treasuries as compensation for persistent inflation risks.

Tony Sycamore, Senior Market Analyst at IG, noted that gold closed slightly lower around $4,293 overnight, pressured by higher energy prices, rising bond yields, a stronger U.S. dollar, and risk-averse positioning ahead of the Fed announcement.

According to Sycamore, gold must reclaim its 200-day moving average near $4,539 to signal that the correction from the $4,697 peak has ended and that the broader bullish trend has resumed. Until then, he sees the potential for a deeper pullback toward support around $4,200.

Despite recent weakness, gold remains significantly above the $4,000 base established in July. Many investors continue to view the precious metal as an attractive long-term portfolio hedge and expect it to regain momentum once broader market conditions become more supportive.

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Citi Cuts Gold

Citi Cuts Gold Exposure Amid Hawkish Fed Outlook

Citi has reduced its gold holdings in its Global Multi-Strategy (GMS) portfolio and asset allocation following a shift in its outlook for Federal Reserve monetary policy.

The bank had previously added a long position in spot gold, anticipating that the Federal Reserve would adopt a more dovish policy stance and that the U.S. Treasury would announce a bond buyback program. These expectations were viewed as supportive catalysts for gold prices.

However, Citi changed its positioning following developments after the Jackson Hole symposium. A repricing toward a more hawkish Federal Reserve outlook, combined with rising energy prices, has altered the investment narrative surrounding gold.

Citi economists now expect interest rates to move higher, prompting the bank to reduce its exposure to the precious metal. The bank highlighted U.S. interest rates as a key driver of gold prices when explaining the change in its positioning.

The shift underscores how changing expectations for Fed policy and interest rates could continue to influence gold prices, particularly as investors reassess the outlook for monetary policy and inflation.

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Gold Holds $4,300

Gold Holds Above $4,300 as Stronger USD Caps Gains Ahead of Central Bank Decisions

Gold (XAU/USD) remained in a consolidation phase heading into the European session on Monday, holding above the $4,300 level as traders awaited a series of major central bank decisions before taking fresh directional positions.

The Federal Reserve (Fed), Bank of England (BoE), and Bank of Japan (BoJ) are scheduled to announce their policy decisions on Wednesday, Thursday, and Friday, respectively. Meanwhile, growing expectations that central banks will maintain a more hawkish stance amid oil-driven inflation risks continue to weigh on the non-yielding precious metal.

Gold Technical Outlook Remains Bearish

Gold’s failure to secure a sustained move above the 100-period Simple Moving Average (SMA) on the four-hour chart, combined with last week’s break below the 200-period SMA, has strengthened the bearish outlook for XAU/USD.

The Moving Average Convergence Divergence (MACD) indicator remains slightly negative, while the Relative Strength Index (RSI) is around 41.33. This points to weak and mildly bearish momentum rather than oversold conditions.

A sustained break below the 50% Fibonacci retracement of the July-August rally, near $4,327, would strengthen the case for further declines toward the 61.8% retracement around $4,241 and the 78.6% level near $4,118.

A deeper sell-off could eventually expose the broader structural support area around the cycle low of $3,961.

On the upside, initial resistance is located at the 200-period SMA near $4,383, followed by the 38.2% Fibonacci retracement at $4,414. A sustained break above these levels could open the door toward the 100-period SMA around $4,472 and the 23.6% retracement near $4,521.

A stronger recovery could eventually bring the previous cycle high near $4,694 back into focus.

Higher Oil Prices Add Pressure on Gold

Crude oil prices remained close to their highest level since May 21, which was reached on Friday, amid heightened tensions in the Middle East and disruptions around the Strait of Hormuz.

In the latest development, Iran-backed Houthi fighters in Yemen said they used drones and missiles to attack a military base in southern Saudi Arabia. A previously planned regional meeting between Gulf countries and Iran regarding the Strait of Hormuz was also postponed.

The developments have kept geopolitical risk premiums elevated and supported oil prices. Higher energy costs could add to inflationary pressures and complicate the Federal Reserve’s policy outlook.

This comes after hotter-than-expected U.S. inflation data released last week increased expectations for a potential Fed rate hike.

Markets Price More Than 85% Chance of Fed Rate Hike

According to the CME Group FedWatch Tool, markets are currently pricing in a probability of more than 85% that the U.S. central bank will raise borrowing costs at the conclusion of its two-day meeting on Wednesday.

Rate hike expectations strengthened following last week’s U.S. Producer Price Index (PPI) and Consumer Price Index (CPI) reports, which pointed to persistent wholesale and consumer inflation in August.

Along with ongoing geopolitical uncertainty, the inflation data helped lift the U.S. dollar back toward the one-week high reached on Friday. A stronger dollar typically weighs on gold, suggesting that the path of least resistance for XAU/USD remains tilted to the downside.

However, U.S. President Donald Trump has continued to pressure the Federal Reserve to keep interest rates unchanged or even lower them, arguing that no country should have lower interest rates than the United States.

The political pressure could discourage traders from building aggressive bearish positions in gold. As a result, traders may prefer to wait for sustained selling pressure and acceptance below $4,300 before anticipating a deeper decline.

Nevertheless, the broader fundamental backdrop suggests that any recovery attempt could continue to attract sellers and remain limited.

U.S. CPI Surprise Boosts Fed Rate Hike Expectations

Analysts at MUFG/BTMU noted that August U.S. CPI inflation came in above expectations, prompting markets to adjust higher their expectations for the Federal Reserve’s policy rate.

The stronger inflation reading has set the stage for this week’s Federal Open Market Committee (FOMC) meeting, as well as the Bank of Japan’s policy decision.

MUFG/BTMU also highlighted that political influence on the Federal Reserve, whether perceived or actual, could become an important factor in how investors interpret the central bank’s next policy steps, particularly amid President Trump’s continued calls for lower interest rates.

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