Gold Price Forecast: XAU/USD recovers from the $4,000 area as bears retain control

• XAU/USD gives up earlier gains, returning to $4,030 after a fresh three-month low of $3,986
• Falling US Treasury yields and fading expectations of Fed tightening offer precious metals a measure of support.
• Gold's recovery faces a ceiling as Oil prices stand at multi-month highs.

A steep fall in US Treasury yields is lending precious metals some support on Friday, with Gold (XAU/USD) little changed on the day just below $4,030 after recovering from three-month lows around $4,000. Further gains remain constrained, however, as Oil prices have surged to fresh highs, compelling central banks worldwide to pursue tighter monetary policies.

Thursday brought a 15 basis point fall in the benchmark US 10-year note yield, its largest daily drop since 2023. Mounting fears of an AI bubble prompted a flight to safety into US government yields.

Following that drop, long-term Treasury yields are on course for a three-week decline. This relieves pressure on the Federal Reserve (Fed), giving it greater scope to gauge the economic effects of September's rate rise while making non-yielding precious metals more attractive.

By contrast, Oil prices are likely to continue posing a substantial obstacle to any meaningful Gold recovery. With Brent Oil reaching fresh five-month highs above $110, the US benchmark WTI barrel also climbed above $100 earlier in the day.

Technical Analysis: Gold bulls face resistance around $4,070

At $4,024.42, XAU/USD remains within the descending channel established from the early September high. Yet the Relative Strength Index (RSI) on the 4-hour chart is deeply oversold, suggesting that selling pressure might be exhausted and that a bullish correction should be considered.

Any advance is likely to encounter resistance at $4,070, an area that previously provided support. Beyond that lie Tuesday's and Wednesday's highs near $4,150, followed by the $4,200 to $4,220 zone, which has repeatedly held back rallies in October.

Should prices slip below the $4,000 area, strong support is likely at the year-to-date lows between $3,960 and $3,941. The lower boundary of the channel now sits further down, around $3,925.

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