Gold rebounds to near $4,350 on weaker US Dollar, falling oil prices

• Gold price recovers to around $4,345 in Friday’s early Asian session. 

• Oil prices extended their fall into a second straight day, easing inflation concerns. 

• The Fed raised rates on Wednesday and flagged ‌more hikes in the coming months. 

Gold price (XAU/USD) rises to near $4,345 during the early Asian session on Friday. The precious metal rebounds from a six-week low amid falling oil prices and a weaker US Dollar (USD). Traders continue to assess the latest Federal Reserve (Fed) rate hike and policy cues.

Crude oil prices dropped to a one-week low on signs that supply disruptions in the Middle East could ease, with Saudi Arabia seeking to partially restore flows through a key pipeline. 

Additionally, US President Donald Trump is expected ‌to meet Gulf leaders on the sidelines of the UN General Assembly in New York next Tuesday to discuss the next steps in the Iran war. These developments have eased inflation concerns and could provide some support to the yellow metal in the near term. 

“We’ve been tied very closely to an inverse relationship with energy prices based on those inflationary pressures ... Energy prices are down fairly dramatically today. So it’s these lower energy prices that are removing some of that pressure on the gold market,” ‌said David Meger, director of metals trading at High Ridge Futures.

On the other hand, the prospect of further US interest rate hikes could exert some selling pressure on the Gold price. Higher interest rates typically weigh on gold because the precious metal does not pay interest, making yield-bearing assets relatively more attractive.

The US Federal Reserve (Fed) on Wednesday raised the interest rate by 25 basis points (bps) to the range of 3.75% and 4.00%, and Fed officials’ projections still point to at least one more increase this year.

Traders are now pricing in nearly a 53.1% chance of another US rate hike when the central bankers meet next in October, compared with nearly 44% a day ago, according to the CME FedWatch tool.

Gold retreats as stronger USD and higher US yields weigh on sentiment

Strategists at OCBC note that gold “reversed lower after the FOMC as the stronger USD and rise in UST yields weighed on sentiment,” with “the 2y yield came close to 4.75% while the 10y returned to around 5%, keeping the opportunity-cost channel firmly in focus.” They add that “near term, elevated yields and a firmer USD may continue to cap gold, but the Fed outcome does not necessarily undermine the broader mediumterm case.” With “a fairly hawkish rate path already in the price,” OCBC argues that “softer US data could pull yields and the dollar lower again,” potentially restoring support for the metal over the medium term.

Technical Analysis: Gold holds above the 100-day SMA, with neutral RSI momentum

In the daily chart, XAU/USD holds a constructive near-term bias, with price above the 100-day moving average (MA) and comfortably above the lower Bollinger Band, suggesting buyers still defend the broader uptrend. However, the latest Bollinger middle band sits overhead as immediate resistance, while the Relative Strength Index (RSI) at 48.58 hovers near neutral, hinting at a consolidative phase rather than a strong directional push.

On the topside, initial resistance is located at the Bollinger simple moving average (SMA) center line near $4,435, followed by the upper Bollinger Band around $4,678, where upside momentum could start to look stretched. On the downside, soft support emerges at the 100-day MA around $4,325, with a deeper bearish extension likely finding demand closer to the lower Bollinger Band near $4,190, a zone that would need to hold to preserve the current bullish structure.

(The technical analysis of this story was written with the help of an AI tool. Know more.)