Gold steadied near $4,110 on Tuesday, a seven-week low, as elevated Treasury yields and a firm dollar keep the metal capped. Traders now watch US jobs and inflation data due this week for clues on whether the Federal Reserve holds rates higher for longer.
Gold hovered near $4,110 on Tuesday, resting on the long-term ascending trendline that has held since the July 2025 lows. Elevated Treasury yields and a firm US dollar continue to weigh on the metal, limiting the scope for a sustained recovery.
Fed's rate hike adds to the pressure
The Federal Reserve's September rate hike has added to gold's troubles. The central bank raised rates by 25 basis points to 3.75%-4.00%, its first increase since 2023, reinforcing its focus on containing persistent inflation. The latest projections point to a median year-end policy rate of 4.1%.
Fed Governor Lisa Cook flagged AI-related demand and elevated oil prices as potential sources of further inflationary pressure. Attention now turns to the upcoming PCE inflation and nonfarm payrolls reports for fresh clues on the Fed's policy outlook. Persistent inflation alongside resilient employment could reinforce higher-for-longer rate expectations, keeping Treasury yields elevated and bullion vulnerable to further losses.
The 10-year Treasury yield stands around 5.24%, near levels last seen in 2007, adding to the pressure on non-yielding gold. Geopolitical tensions remain an additional headwind, potentially keeping oil prices and inflation risks elevated, while de-escalation could ease some of these pressures.
Trendline near $4,100 becomes the key test
The ascending trendline near $4,100 is becoming a crucial test for the bulls. Stronger-than-expected US data could increase the risk of a break below this support, exposing the psychological $4,000 mark, followed by June's eight-month low around $3,940.
Conversely, softer US data or easing inflation concerns could take pressure off Treasury yields and help gold rebound from the trendline. In that case, the $4,300 region, where the 20-, 50- and 100-day moving averages converge, could come back into focus, with a break higher paving the way toward $4,400 and the monthly highs around $4,500.
Technical indicators offer tentative signs that selling pressure is easing, with the stochastics, RSI and MACD beginning to flatten. This does not yet signal a bullish reversal, but it leaves scope for a rebound should the $4,100 region hold and the fundamental backdrop turn more supportive.
Source: Commodities Analysis & Opinion
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