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XAU/USD Falls Toward $4,123 Amid Hawkish Fed Expectations
Traders' Opinions
Summary:
Gold fell for a third consecutive day to around $4,123 as oil-driven inflation risks and elevated US yields pressured the non-yielding metal. Markets expect the Fed to hold rates in October but increasingly anticipate another hike in December.
Sell
TradingXAUUSD
EXP
4125.00
Entry Price
4000.00
TP
4200.00
SL
4115.09 -9.91 -0.24%
0
Point
Flat
4000.00
TP
CLOSING
4125.00
Entry Price
4200.00
SL
Gold extended its decline for a third consecutive session on Tuesday, falling 0.42% to around $4,123 as rising energy prices and expectations of tighter monetary policy weighed on demand for the precious metal. Higher oil prices are reviving inflation concerns, reducing the likelihood of an early shift toward lower interest rates.
WTI crude oil climbed above $100, reaching its highest level in more than a month amid reports of Houthi attacks on Saudi energy infrastructure and increased threats to shipping through the Strait of Hormuz. Persistent supply concerns have kept energy costs elevated, adding to inflationary pressures and complicating the outlook for central banks.
In the United States, September’s Consumer Price Index (CPI) and Producer Price Index (PPI) exceeded expectations, strengthening speculation that the Federal Reserve could raise rates again before the end of the year. However, markets largely expect policymakers to hold rates steady at the October 27–28 meeting following September’s 25-basis-point increase. According to CME FedWatch data, traders assign a 17% probability to another hike in October and a 92% probability of an increase in December.
The prospect of interest rates remaining elevated continues to challenge Gold, which offers no yield. Higher Treasury yields can make interest-bearing investments more attractive, while a firmer US Dollar increases the cost of Gold for buyers using other currencies. The US Dollar Index was near 101.88, down 0.10% on the day but above last week’s low of 101.58. Meanwhile, the 10-year US Treasury yield recovered to approximately 5.13% from 5.03%.
With the US economic calendar relatively quiet, Gold’s near-term direction may depend heavily on movements in crude oil, Treasury yields and the Dollar. Continued inflation concerns and a hawkish Fed outlook remain significant obstacles to a sustained recovery.
Technical Analysis
Gold is facing renewed selling pressure on the H1 chart, trading near $4,120.60 after failing to sustain its recovery toward the $4,170–$4,190 region. The recent price structure shows lower highs and a fresh move toward the lower end of the established trading range, suggesting that sellers are gaining control of the short-term trend.
The key resistance zone lies around $4,125–$4,130, where previous support has been breached and could now act as a barrier to recovery. Unless buyers reclaim this area and build momentum above it, rebounds may remain corrective rather than signal a sustained bullish reversal. The broader resistance zone around $4,195–$4,205 represents a more significant hurdle for any recovery.
On the downside, the immediate focus is on the $4,080–$4,075 support zone. Gold has reacted from this region previously, making it an important level to watch. A decisive break below this support could expose the next downside area around $4,050, followed by the $4,000–$3,995 region, which aligns with the bearish projection on the chart.
Although a temporary rebound toward $4,125–$4,130 remains possible, the technical outlook favors further weakness while price stays below the broken support zone. A sustained move back above $4,130 would weaken the immediate bearish setup and increase the possibility of a recovery toward higher resistance.
TRADE RECOMMENDATION
SELL XAU/USD
ENTRY PRICE: 4125.00
STOP LOSS: 4200.00
TAKE PROFIT: 4000.00
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