XAU/USD Weakens Ahead of Key US Inflation and GDP Data

Traders' Opinions

Summary:

Gold falls to around $4,036 as the Fed’s hawkish undertone keeps December rate-hike expectations elevated. Upcoming US PCE inflation and GDP data could determine the next move in bullion and the Dollar.

SELL XAUUSD

Close Time

CLOSED

4028.00

Entry Price

3950.00

4100.00

4020.95 -46.29 -1.14%

100.4

Pips

Profit

3950.00

4017.96

Exit Price

4028.00

Entry Price

4100.00

Gold prices weakened on Thursday, with XAU/USD falling 0.76% to around $4,036 as traders reassessed the Federal Reserve’s latest policy signals and prepared for fresh US inflation data. Although the Fed left interest rates unchanged at 3.75%–4.00%, its decision did little to remove expectations of further monetary tightening before the end of the year. With markets pricing in roughly an 80% probability of a December rate hike, Gold remains vulnerable to a stronger US Dollar and rising interest-rate expectations.

The Federal Open Market Committee voted 10-2 to maintain its current policy rate, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of a 25-basis-point increase. The initial reaction was more supportive of Gold, as the decision briefly pressured the Dollar and short-term Treasury yields. However, the broader message from the meeting was less encouraging for bullion, with Chair Kevin Warsh reiterating his commitment to restoring price stability and cautioning against drawing conclusions from any single economic release.

The Fed’s emphasis on gathering more information before its next decision has left monetary policy firmly data-dependent. Rabobank analysts interpreted Warsh’s comments as keeping the door open to another increase in December, particularly as policymakers await additional evidence on inflation and economic activity. For Gold, this uncertainty creates a difficult backdrop: investors may seek protection against economic and geopolitical risks, but the prospect of higher borrowing costs increases the opportunity cost of holding a non-yielding asset.

Attention now turns to the US Personal Consumption Expenditures price index, the Fed’s preferred inflation measure, alongside the advance estimate of third-quarter GDP. Both releases could influence expectations for the next policy meeting. The US Dollar Index remains above 102.00 ahead of the figures, recovering some ground after its previous session’s decline.

The inflation report could determine whether Gold’s latest weakness extends further or gives way to a temporary recovery. A stronger-than-expected PCE reading would likely reinforce expectations of additional tightening, potentially supporting the Dollar and putting further pressure on bullion. Conversely, softer inflation could reduce the perceived need for another rate increase and give Gold room to rebound. For now, the balance of risks remains tilted against the precious metal while markets await clearer evidence on the Fed’s next move.

Technical Analysis

Gold (XAU/USD) remains under strong bearish pressure on the H4 chart, trading around $4,028 after breaking below the key support zone near $4,100–$4,115. The sharp decline from the $4,190 area confirms that sellers remain in control, while the subsequent consolidation below the broken support suggests the market is struggling to regain bullish momentum. The former support zone now acts as resistance, and price continues to form a bearish structure of lower highs.

The recent rebound toward $4,055–$4,070 appears corrective rather than a confirmed reversal. Gold has struggled to sustain gains around the 0.382 Fibonacci retracement near $4,058 and remains below the 0.5 retracement around $4,095 and the 0.618 level near $4,115. The descending trendline also reinforces the bearish setup. Unless buyers reclaim these resistance levels and establish sustained momentum above them, recovery attempts may attract renewed selling pressure.

On the downside, immediate support lies around $3,990–$3,985, near the recent consolidation lows. A decisive break below this area would strengthen the case for another bearish leg, with $3,950 acting as an intermediate level before the deeper projected target around $3,740. However, if Gold breaks above $4,070 and subsequently reclaims $4,100–$4,115, the immediate bearish structure would weaken and a broader recovery could develop. For now, the H4 chart favors selling rallies while price remains below resistance, although upcoming US economic data and Federal Reserve expectations could increase volatility.

TRADE RECOMMENDATION

SELL XAU/USD

ENTRY PRICE: 4028.00

STOP LOSS: 4100.00

TAKE PROFIT: 3950.00

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