Gold (XAU/USD) edged lower during Asian trading on Wednesday, failing to hold gains from the previous session’s bounce above $4,300. The precious metal came under pressure as the US dollar strengthened to its highest level since late July, supported by the Federal Reserve’s hawkish outlook and persistent geopolitical uncertainties.
Fed hawkishness supports the dollar
The Federal Reserve raised interest rates for the first time in over three years at its September meeting and signalled one more hike this year. Several Fed officials, including St. Louis President Alberto Musalem and Chicago President Austan Goolsbee, explicitly backed further tightening, citing elevated inflation risks. Boston’s Susan Collins and Richmond’s Tom Barkin also left the door open to additional rate increases.
According to the CME Group’s FedWatch Tool, traders now see a 90% chance of a rate hike in December. Higher interest rates make non-yielding assets like gold less attractive, while a stronger dollar, buoyed by the yield advantage, weighs directly on the dollar-denominated metal.
Geopolitical backdrop remains tense
Geopolitical risks continued to support the dollar’s safe-haven appeal. US President Donald Trump told the United Nations General Assembly that he faces a “big decision” on whether to reach a deal with Iran or “annihilate” the Islamic Republic if the conflict over the Strait of Hormuz goes unresolved. Meanwhile, tighter US sanctions targeting Iranian aviation came into force on Wednesday. Iranian Foreign Minister Abbas Araghchi met with US Special Envoy Steve Witkoff to reiterate Tehran’s conditions for reopening the Strait, though Trump offered no further details, saying only that discussions “went well.”
So far, the geopolitical premium has favoured the greenback rather than gold, dampening bullion’s appeal as a haven.
Technical outlook: capped below key moving average
From a technical perspective, XAU/USD remains below the 100-period exponential moving average (EMA) at $4,369, a level that has acted as resistance during the Asian session. The pair is trading just above the 50% Fibonacci retracement of the rally from $3,934.91 to $4,694.41, near $4,314.
Momentum indicators are mixed: the Relative Strength Index (RSI) at 47.86 has edged toward neutral, while the Moving Average Convergence Divergence (MACD) reading of -9.80 points to waning bullish pressure. This keeps the near-term bias tilted to the downside as long as gold remains under the EMA.
Immediate support is seen at $4,314 (50% Fibonacci), followed by $4,225 (61.8%) and $4,097 (78.6%). A break below the prior swing low at $3,934 would be a significant bearish signal. On the upside, a daily close above $4,369 (100-period EMA) is needed to ease bearish pressure, opening the way toward $4,404 (38.2% retracement) and eventually the $4,515–$4,694 resistance band. (Technical analysis assisted by an AI tool.)
Key events ahead
Traders will watch the release of flash PMIs for major developed economies later Wednesday, along with speeches from Federal Open Market Committee members. The main event, however, remains Thursday’s meeting between President Trump and Chinese President Xi Jinping, which could inject fresh volatility into currency and commodity markets.
Key takeaways
- Gold fell on Wednesday as the US dollar rallied to its highest since late July on the back of hawkish Fed commentary and rate hike expectations.
- Several Fed officials have endorsed further tightening, with markets pricing a 90% probability of a December rate increase.
- Geopolitical tensions involving Iran and the Strait of Hormuz continue to support the dollar, limiting gold’s upside.
- Technical levels show resistance at the 100-period EMA ($4,369) and support at $4,314 (50% Fibonacci) and lower Fibonacci levels.
Common questions
Why is gold under pressure despite geopolitical tensions?
Geopolitical risks have so far boosted the US dollar rather than gold, as investors favour the dollar’s liquidity and yield advantage. Higher US interest rates also reduce the appeal of non-yielding gold.
What did Federal Reserve officials say about future rate hikes?
St. Louis Fed President Alberto Musalem and Chicago Fed President Austan Goolsbee explicitly backed further tightening. Boston’s Susan Collins and Richmond’s Tom Barkin left the door open to additional increases, citing elevated inflation risks.
What are the key support and resistance levels for gold?
Immediate support is at $4,314 (50% Fibonacci retracement), followed by $4,225 (61.8%) and $4,097 (78.6%). On the upside, resistance lies at the 100-period EMA of $4,369, then $4,404 (38.2% retracement) and the cycle high zone around $4,694.
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