The international gold market staged a modest recovery during Friday's Asian session, with spot gold (XAU/USD) trading near $4,170 per ounce as it attempted to shake off a two-month low touched earlier. The metal has been under sustained pressure recently, primarily due to increasingly hawkish expectations around Federal Reserve monetary policy and growing concerns about further rate hikes. Meanwhile, shifting Middle East dynamics and energy price trends continue to shape investor assessments of inflation, interest rates, and safe-haven assets, leaving gold's rebound constrained by multiple factors.
US President Donald Trump stated that the United States will not attack Iran before the midterm elections, noting that both sides are engaged in "productive discussions" without disclosing specific details. Previously, the White House had considered military action against Iran ahead of the November midterms. The latest remarks have temporarily eased market fears of an immediate escalation in conflict and could dampen some short-term safe-haven buying. However, diplomatic engagement does not mean risks have been fully eliminated. If follow-up negotiations lack substantive progress or energy transportation is disrupted again, gold could still attract fresh safe-haven demand.
Compared to the support from geopolitical developments, Fed policy expectations exert a more direct influence on gold. The latest Fed meeting minutes showed that policymakers unanimously supported a September rate hike, with most officials believing that another increase in the federal funds rate target range before year-end could be appropriate. This suggests that even as markets begin debating whether future meetings might pause, policymakers have not yet clearly shifted to a dovish stance. Fed Governor Christopher Waller said on Thursday that further rate increases may still be necessary, but the pace is flexible and he did not rule out a pause in October. This statement conveys two distinct signals: on one hand, the Fed remains concerned about inflation persistence, and the policy rate may need to stay elevated or even rise further; on the other hand, future policy actions are not necessarily going to proceed at every consecutive meeting, as policymakers will adjust their pace based on economic and inflation data.
The CME FedWatch Tool shows that market-implied probability of an October rate hike stands at approximately 17.7%, while the expected probability of a December hike is around 81.3%. These figures reflect market pricing rather than actual Fed policy decisions. The elevated year-end rate hike expectations mean gold will continue to struggle under the weight of interest rate factors in the near term. If upcoming inflation data remains strong, the market may further raise terminal rate expectations, pushing the dollar and Treasury yields higher, thereby increasing the opportunity cost of holding non-yielding gold. Conversely, if economic activity cools markedly and inflation pressures ease, expectations for further tightening could recede, providing room for gold prices to recover.
Changes in the energy market add further complexity to this policy dynamic. Rising crude oil prices could drive up transportation, production, and energy consumption costs, making the disinflation process more protracted. If energy shocks persist, the Fed may need to maintain a hawkish stance for longer, keeping gold under pressure from the rate side. However, if oil price gains further undermine economic growth and shift market focus toward downside economic risks, safe-haven demand could provide support for gold. Therefore, the impact of energy prices on gold is not unidirectional; the key lies in whether the inflation effect or the growth effect dominates.
Within the precious metals complex, gold has recently underperformed copper and some other metals. Analysis from Scotiabank noted that copper prices are still consolidating near historical highs, while gold appears fragile after breaking below $4,100 per ounce on Wednesday, with price levels falling back to the region seen since early August. This divergence indicates that the pressure on gold does not come entirely from the broader metals sector, but is closely tied to real interest rate expectations, dollar performance, and investors' reassessment of monetary policy. Copper's high-level consolidation more reflects industrial demand, supply-demand dynamics, and market judgments about economic activity; the two cannot be simply viewed through the same trading logic.
Additionally, public remarks from Fed officials continue to reinforce market attention on tightening policy. Relevant speech tracking indicators show that Waller's hawkish score for this appearance was 8, above his historical average of 7.2; the Fed sentiment index rose 0.42 points to 138.34, significantly above the neutral benchmark of 100. Such indicators are quantitative results under specific analytical frameworks and do not directly determine interest rates or dollar movements, but they reflect that recent policy communication remains generally hawkish. Against this backdrop, even if gold receives brief buying interest from geopolitical risks, it must contend with persistent headwinds from a stronger dollar and rising yields.
The most closely watched factors currently are whether Fed rate hike expectations strengthen further, whether US Treasury yields can continue to rise, and whether gold prices can establish stable support near recent lows. If inflation and employment data continue to show economic resilience, gold's rebound may be limited; if policy expectations cool or geopolitical risks re-escalate, gold prices could gain new upward momentum. In the short term, the market remains in a phase where policy pressure and safe-haven demand counterbalance each other, and a single-day rebound is not sufficient to confirm a trend reversal.
From a fundamental perspective, gold remains pressured by the Fed's hawkish stance and rate hike expectations for the year, while the easing of US-Iran tensions has somewhat reduced safe-haven demand. If US inflation data stays strong and the dollar and Treasury yields continue to rise, gold prices could retest recent lows; if rate hike expectations cool or geopolitical risks re-intensify, a stronger technical rebound cannot be ruled out.
On the daily chart, spot gold continues to trade below the Bollinger Band middle line and the 100-day simple moving average, with the overall trend leaning weak. The Relative Strength Index (RSI) is approximately 39.99, below the neutral level of 50, indicating that sellers still hold some advantage but have not yet entered typical extreme oversold territory. On the downside, initial support is focused near $4,060, corresponding to the Bollinger Band lower rail; if gold effectively breaks below this level while the dollar and Treasury yields strengthen in tandem, the market could probe lower levels. On the upside, initial resistance is around $4,240, corresponding to the Bollinger Band middle line, followed by the 100-day moving average near $4,265. If gold can reclaim these two zones, a short-term rebound could extend further; stronger resistance above is watched at the Bollinger Band upper rail near $4,420. Overall, until gold recovers the middle line and the 100-day moving average, daily rebounds should be viewed with caution.
On the 4-hour chart, gold has rebounded from near two-month lows to around $4,170, suggesting some buying support at lower levels, but there is still insufficient evidence to confirm that the short-term trend has reversed. If prices can remain stable above $4,100 and gradually break through recent local highs formed during the rebound, the short-term recovery could continue; if the rebound repeatedly faces resistance from above and falls below $4,100 again, caution should be taken regarding a retest of support near $4,060. Due to the lack of complete real-time 4-hour moving average, RSI, and MACD data, it is not possible at this time to confirm whether momentum has turned stronger.
Editor's Summary
Spot gold is currently in a phase where monetary policy pressure and safe-haven demand counterbalance each other. The Fed meeting minutes and Waller's hawkish remarks have reinforced expectations of further rate hikes this year, raising the holding cost of gold; the easing signals from US-Iran dialogue have temporarily limited safe-haven buying driven by geopolitical risks. The combined effect of these two forces means that even when gold rebounds, it still faces strong upside pressure. Fed policy expectations, dollar movements, US Treasury yields, and energy price changes will continue to determine gold's direction. If inflation pressures persist and rate hike expectations intensify further, gold prices could retest support near $4,060 or even extend the correction; if US economic data weakens, yields decline, or geopolitical risks escalate again, gold could see a more pronounced recovery. The current rebound near $4,170 is not sufficient to confirm a trend reversal. Key focus should be on the breakout situation between the $4,060 support and the $4,240–$4,265 resistance zone, while remaining vigilant against sharp price swings triggered by macroeconomic data and unexpected news.
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