Below $4,150: gold holds steady as traders weigh Fed rate path and Middle East risk

• $4,125 is Gold’s steady trading level early in Thursday’s Asian session.
• About 84% is the probability assigned to unchanged Fed interest rates in October.
• Rising oil prices, driven by intensifying Middle East tensions, could put pressure on Gold.

$4,125 is the level around which Gold (XAU/USD) is stabilising. Trading early in Thursday’s Asian session remains steady after fluctuations in the precious metal as traders weigh the Federal Reserve’s (Fed) interest-rate outlook against continuing tensions in the Middle East.

An 84% probability of unchanged rates at the October meeting is now indicated by the CME FedWatch tool. Last week, Fed Chairman Kevin Warsh declined to signal how this month’s policy meeting would conclude. He nevertheless said that inflation exceeding expectations had not altered his assessment of the US economy.

Markets still price in another rate increase at the December meeting, despite broad expectations for a hold next week. The policy outlook therefore remains skewed towards tightening, potentially pressuring the yellow metal. As gold pays no interest, higher rates generally reduce its appeal relative to yield-bearing assets.

High energy costs also raise the prospect of further monetary policy adjustments by the US central bank to curb price pressures.

Traders remain unsettled by mounting supply risks in the Middle East. On Wednesday, Iran’s Foreign Minister Abbas Araghchi said that “while ‌‌Iran is firmly committed to seeking a dignified peaceful resolution to the conflict, we are also fully prepared to defend ourselves.” Iranian President Masoud Pezeshkian, meanwhile, said the US could not expect dialogue with Iran while subjecting it to a blockade and threats.

Dollar edges higher as French unrest pressures equities

Political unrest in France and a recovery in US equities have produced contrasting market moves, according to Commerzbank analysts. They observe that "European equities declined amid political unrest in France, while US Treasury yields rose as the equity recovery reduced safe-haven demand." They also note that "the USD was slightly firmer," as stabilising sentiment towards US assets prompted a modest move back into the Dollar.

Weaker commodities also feature in Commerzbank’s assessment: "Brent crude oil prices fell 0.3% to USD109.55" and "Gold fell 0.6% to USD4,141," the bank reports. Together, higher US yields and diminished safe-haven demand have put pressure on traditional hedges.

5.6/10 speech score: Warsh weighs crisis caution against investment and AI optimism

A 5.6/10 FXS Speechtracker score accompanied Fed Chair Warsh’s moderately constructive remarks. Slightly below the historical average of 6.1/10, the reading suggests the speech offered markets only modest additional information. His acknowledgement of being “over-scarred” by the Global Financial Crisis points to an enduring cautious bias on financial stability. At the same time, he emphasised structural growth, a surge in investment and confidence in achieving price stability, without committing in advance to either the October or December decision. Warsh presented AI as both a near-term source of demand and a means of improving data and monetary policy. That forward-looking approach could eventually underpin the Dollar if expectations for productivity and growth strengthen.

A 0.00-point move left the FXS Fed Sentiment Index unchanged at a still-hawkish 127.51. Despite the slightly weaker FXS Speechtracker score, the speech therefore brought no material change in the perceived policy stance. The elevated index level, coupled with no day-on-day movement, indicates that markets still place the Fed firmly in hawkish territory. Warsh’s caution, shaped by past crises, is balanced by his optimism about investment and AI-led growth.

Technical Analysis: 100-day SMA continues to cap Gold

Below both the 20-period Bollinger simple moving average and the 100-day moving average, spot XAU/USD retains a bearish near-term bias on the daily chart. However, prices remain above the lower Bollinger Band, pointing to short-term consolidation rather than an outright breakdown. A Relative Strength Index reading of 42.60 lies in neutral-to-soft territory: downward momentum persists but is not overstretched.

The Bollinger midline near $4,160 provides the first upside barrier. Beyond that, resistance lies at the 100-day moving average of $4,230, followed by a stronger ceiling at the upper Bollinger Band of $4,255 should buyers attempt a rebound. Immediate downside support comes from the lower Bollinger Band around $4,070. A sustained breach would leave scope for a deeper retreat; remaining above it would preserve a bearish, range-bound profile for XAU/USD.

(The technical analysis of this story was written with the help of an AI tool. Find out more.)