Gold (XAU/USD) remained range-bound and traded below $4,150 into Monday’s European session, held back by a stronger US Dollar that rose to its highest level since April 2025. September’s US Nonfarm Payrolls showed 29K jobs added, versus a downwardly revised 133K previously and 90K expected; unemployment ticked up to 4.2% from 4.1%, while annual wage growth slowed to 3.0%, matching the weakest pace since May 2021. With last week’s softer inflation data, reduced expectations for an October Federal Reserve move pushed US bond yields away from multi-year highs, offering some support to non-yielding gold even as markets still price an 85% chance of higher borrowing costs by year-end.
Middle East and Russia-Ukraine tensions kept demand firm for the greenback, with developments including Iran signalling readiness to return to war and renewed regional military operations, while Ukraine reported strikes on Kyiv region, Kharkiv and Dnipro. Attention turns to US ISM Services PMI and remarks from FOMC members. Technically, XAU/USD stayed below the 100-period SMA and the 61.8% Fibonacci level at $4,225.30; RSI stood at 40.92 and MACD dipped into negative territory. Resistance sits at $4,225, then $4,269, with further hurdles at $4,314 and $4,403; support levels include $4,098 and $3,936.
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Dollar Resilience and Federal Reserve Outlook
We are currently seeing gold consolidate below the $4,150 level as a surging US Dollar reaches its highest point since April 2025. Despite weak US jobs data last Friday showing only 29,000 new positions added in September, the dollar remains resilient. This strength in the greenback is acting as a heavy lid on gold’s upside potential in the short term.
We expect the Federal Reserve to hold off on interest rate hikes in October, especially with annual wage growth slowing to 3.0% and unemployment rising to 4.2%. However, market data still shows an 85% probability of a rate hike by December to combat persistent energy-driven inflation. Historically, during similar periods of late-cycle monetary policy, gold has exhibited high volatility before establishing a clear trend.
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Geopolitical Tensions and Technical Levels
We must also monitor intensifying global conflicts in the Middle East and Europe, which are keeping geopolitical risk premiums high. Although gold is traditionally a safe haven, the US Dollar is currently absorbing much of this protective capital flow. Past data shows that during intense geopolitical shocks, the dollar’s liquidity advantage can temporarily overshadow gold’s appeal.
From a technical perspective, we observe that gold is trading with a bearish bias below its 100-period moving average and the key Fibonacci level of $4,225.30. If selling pressure intensifies, we should watch the immediate support floor at $4,098, followed by a deeper structural level near $3,936. Conversely, a sustained breakout above $4,225 could shift our focus toward the next resistance at $4,269.
We advise traders to remain cautious and look to upcoming economic releases for immediate momentum. The impending US ISM Services PMI will be critical, as readings above the historical 50.0 expansion threshold typically boost the dollar further. We should also closely monitor speeches by central bank members in the coming weeks to gauge the likelihood of a December rate adjustment.
