Gold (XAU/USD) is trading near $4,150 on Monday, virtually flat after a modest uptick during the Asian session. The precious metal is struggling to build on any gains as the US dollar climbs to its highest level since April 2025, pressuring the non-yielding asset. At the same time, weaker-than-expected US jobs data has reduced the likelihood of a Federal Reserve rate hike in October, providing some support for gold.
Why gold is capped by a stronger dollar
The US dollar’s rally to a fresh year-to-date high is the primary headwind for gold. Investors largely looked past Friday’s disappointing Nonfarm Payrolls (NFP) report, which showed the economy added just 29,000 new jobs in September, well below the consensus estimate of 90,000 and down from the downwardly revised 133,000 in August. The unemployment rate unexpectedly rose to 4.2% from 4.1%, and annual wage growth slowed to 3.0%, the lowest since May 2021.
Analysts at ABN Amro described the labour market data as “consistent with our base case,” arguing that the apparent resurgence in previous months was “somewhat of a mirage.” They noted that the three-month average of 51,000 job additions is solid given labour supply but does not indicate a hot market. They added that the softer employment tone, especially alongside last week’s downside surprise in the PCE inflation report, “removes the pressure on the Fed to hike in October.” However, ABN Amro still expects a rate hike in December due to persistent inflationary pressure from the energy shock.
The CME Group’s FedWatch Tool shows traders are pricing in about an 85% chance of a rate increase by the end of the year. This outlook, combined with the dollar’s strength, is keeping gold bulls on the sidelines.
Geopolitical tensions and the dollar’s safe-haven appeal
The US dollar is also benefiting from heightened geopolitical uncertainty. Ongoing conflicts in the Middle East and the widening Russia-Ukraine war are increasing demand for the greenback as a safe haven. Iran’s Foreign Minister Abbas Araghchi said there is no military solution to the conflict with the US but that Tehran remains ready to return to war. Iranian parliament speaker Mohammad Bagher Ghalibaf stated that the Strait of Hormuz will not reopen until their conditions are met. Meanwhile, the head of Yemen’s governing body announced military operations to retake territory held by Houthis. Separately, Ukraine reported deadly Russian air strikes on Kyiv, Kharkiv, and Dnipro, with President Zelenskyy promising a response.
These developments keep the geopolitical risk premium in play, favouring the dollar and capping gold’s upside. Traders are cautious about taking long positions in gold while the dollar remains strong.
Technical outlook: resistance and support levels
On the 4-hour chart, Gold is trading below the 100-period Simple Moving Average (SMA) and the 61.8% Fibonacci retracement level at $4,225.30. The Relative Strength Index (RSI) stands at 40.92, below the midline, while the MACD indicator has slipped marginally into negative territory with a flat histogram. This points to waning upside momentum and suggests overhead resistance is capping the metal.
Immediate resistance is at the 61.8% Fib level around $4,225, followed by the 100-period SMA at $4,269. Stronger barriers lie at the 50% retracement of $4,314 and the 38.2% level at $4,403. On the downside, first support is at the 78.6% Fib retracement of $4,098. A more important structural floor is the prior swing low near $3,936, where sellers may hesitate on a deeper pullback.
Key takeaways
- Gold is trading near $4,150, held back by a US dollar at its strongest since April 2025.
- US September jobs data came in weaker than expected, reducing the chance of a Fed rate hike in October but leaving an 85% probability of a hike by year-end.
- Geopolitical tensions in the Middle East and Ukraine-Russia are boosting the dollar’s safe-haven appeal.
- Technical indicators show bearish near-term momentum, with key resistance at $4,225 and support at $4,098.
Common questions
Why is gold not rallying despite weak US jobs data?
The weaker-than-expected jobs data reduced the likelihood of an October rate hike, which is supportive for gold. However, this has been offset by a sharp rally in the US dollar to a new 2025 high. The dollar’s strength, driven by geopolitical safe-haven flows and ongoing expectations of a rate hike by December, is keeping gold under pressure.
What are the key support and resistance levels for gold?
On the 4-hour chart, immediate resistance is at the 61.8% Fibonacci retracement of $4,225, followed by the 100-period SMA at $4,269. Support is at the 78.6% Fib level of $4,098, with a stronger floor near the prior swing low of $3,936.
Conclusion
Gold is caught between conflicting forces: a strong US dollar that is capping upside, and diminished Fed tightening expectations that provide a floor. The upcoming US ISM Services PMI and speeches by FOMC members may offer further direction. For now, the metal remains range-bound near $4,150, with traders watching for a breakout above $4,225 or a dip toward $4,098. To track how these levels hold, check the live gold price.