Gold traded below $4,150 in Thursday’s Asian session, struggling to build on a modest rebound from a two-month low as the US Dollar retained a firm tone. Federal Reserve minutes from the September 15–16 FOMC meeting showed a unanimous vote to raise the federal funds rate target range and a continued tilt towards further tightening, though market pricing still leans towards a pause in October. Even so, derivatives pricing points to around an 80% chance of a December rate rise, while elevated US bond yields and lingering Middle East conflict risks have continued to underpin demand for the Greenback and limit bullion’s upside.
Geopolitical risk remained in focus after reports that US Central Command had been instructed days earlier to finalise preparations for resuming major combat operations in Iran, as President Donald Trump weighs a date for strikes that sources said could come before US midterm elections and possibly ahead of Israeli elections a week earlier. Traders are watching US Weekly Initial Jobless Claims and speeches from FOMC members for near-term direction. Technically, XAU/USD is holding below the 78.6% Fibonacci retracement of the June–August rise, with the RSI near 40 and MACD negative; resistance is flagged at $4,233, $4,320 and $4,332, then $4,408 and $4,516, while support sits at $4,108 and about $3,949.
Trading Strategy and Risk Management
We suggest that derivative traders exercise extreme caution and avoid rushing into long gold positions despite the recent bounce from two-month lows. With XAU/USD struggling below the $4,150 level, the strong US dollar continues to limit any significant upward movement. We should wait for a clear breakout and solid consolidation above the $4,233 resistance level before committing to a medium-term bullish bias.
The macroeconomic environment heavily favors the greenback, especially after the Federal Reserve’s latest meeting minutes signaled a potential rate hike in December. Historically, when the CME FedWatch Tool shows an 80% probability of an upcoming rate hike, gold prices face strong headwinds due to rising opportunity costs. We recommend keeping a close eye on US 10-year Treasury yields, which remain elevated near multi-year highs and continue to draw capital away from non-yielding assets.
Geopolitical Volatility and Technical Outlook
Geopolitical developments regarding potential military action in Iran ahead of the November 2026 US midterm elections are bound to inject massive volatility into the markets. During previous major geopolitical escalations in the Middle East, gold has historically experienced sharp, short-term safe-haven spikes of 5% to 8% within days. We believe traders should utilize tight stop-loss orders on all active positions to protect capital against sudden, news-driven market swings.
From a technical perspective, momentum indicators like the RSI hovering near 40 suggest that sellers still hold the upper hand. If the bearish pressure continues, we expect gold to test the immediate support level at $4,108, with a break below opening the door to the key $3,949 mark. Derivative traders can look to exploit these swings by trading the range between $4,108 and $4,233 using short-term strategies on their preferred trading platforms.
