Gold eased back after approaching $4,400 on Friday, as the Federal Reserve’s hawkish outlook underpinned the US Dollar and kept US Treasury yields firm, while a rebound in Oil also weighed on the metal. XAU/USD was around $4,354, up 0.29% on the day, after a volatile week in which the Fed lifted rates by 25 bps to 3.75%–4.00%, its first increase since 2023. Gold sank to a more-than-one-month low of $4,235, while the US Dollar Index (DXY) hovered near 100.50, close to seven-week highs; earlier pressure eased when Oil fell on reports of Saudi export rerouting and repairs to its East-West pipeline.
The Fed reiterated its 2% inflation goal and the dot plot showed 16 of 18 officials expecting at least one more hike this year, with the median policy-rate forecast at 4.1% for 2026 and 2027. Markets price about a 55% chance of an October move via the CME FedWatch Tool. West Texas Intermediate traded near $97.20 after rebounding from $94.63 as Hormuz traffic restrictions offset supply news, while the 10-year yield sat around 4.99%, up roughly 1% and near the 2007 peak of 5.04%. Technically, XAU/USD is below the 20-period SMA at $4,422; MACD is negative, ADX is 16 and RSI is near 51, with resistance at $4,422, $4,500 and $4,654, and support at $4,189 and $4,000. Next week’s diary is light, but Fed speakers and a Reuters-reported Trump meeting with Gulf Cooperation Council officials at the UN on Tuesday are in focus.
Short-Term Outlook and Trading Strategies
We believe derivative traders should prepare for a range-bound market with a slight downward bias over the next few weeks. With gold trading around $4,354 and facing strong resistance at the 20-day moving average of $4,422, short-term upside appears limited. Given the low Average Directional Index of 16, which points to weak trend strength, we should consider deploying range-bound options strategies like iron condors to capture premium.
The pressure from the Federal Reserve’s recent rate hike to the 3.75%-4.00% range will continue to weigh on the precious metal. Historically, when the US 10-year Treasury yield approaches key psychological thresholds—currently trading at 4.99%—non-yielding assets like gold face heavy liquidations. We suggest buying short-term put options or utilizing bear put spreads to target the Bollinger lower band near $4,189 as these high yields persist.
Oil prices hovering near $97.20 due to supply disruptions are keeping inflation expectations and bond yields stubbornly high. We need to closely monitor the upcoming diplomatic meetings on the sidelines of the United Nations General Assembly next week, as any easing of geopolitical tensions could cool oil prices. If energy pressures begin to subside, traders can transition into call calendar spreads to position for a potential late-October recovery.
Long-Term Structural Support
Despite near-term volatility, the structural bull case for gold remains supported by robust central bank demand. Historical data shows that central bank net purchases have consistently stayed above the 1,000-tonne mark in recent years as nations diversify their reserves. We recommend using any deeper corrections toward the major horizontal support at $4,000 to accumulate long-dated call options for the coming year.
