Gold eyes weekly loss of over 3% as Fed interest rate decision looms

Gold slips back below $4,000 after failing to sustain an earlier rebound.
Traders await next week’s Fed interest rate decision.
XAU/USD remains bearish below key moving averages, with RSI nearing oversold territory.

Gold (XAU/USD) loses momentum after attempting a rebound from a three-month low of $3,986 touched during Asian trading hours. Buyers remain on the sidelines as market sentiment stays fragile. At the time of writing, XAU/USD trades around $3,994, below an intraday high of $4,034, on track for a weekly decline of more than 3%.

Analysts at Rabobank describe “a brutal day for markets on Thursday,” noting that the S&P 500 fell “1.2% to $7663, dragged lower by the Philadelphia Stock Exchange Semiconductor index, which marched its way to the lowest level since July of this year.” The sharp equity sell-off was mirrored by a strong rally in government bonds, with Rabobank highlighting that “bad things for equities meant good things for US Treasuries, as the US 10-year yield moved back below 5% for the first time since September, despite higher energy prices, and the 2-year made its way back below 4.75%.”

Gold failed to benefit from Thursday’s equity slump and falling US Treasury yields as several factors weighed on the metal. Middle East tensions keep upward pressure on energy prices, with West Texas Intermediate Oil trading around $100 per barrel, near five-week highs. The resulting inflationary pressures reinforce expectations that interest rates will remain higher for longer. This increases the opportunity cost of holding non-yielding metal.

Some traders may also have sold precious metals to cover losses in equities. Technical selling likely added to the pressure after Gold broke below the $4,100-$4,200 range that largely held since the start of October.

Against this backdrop, Gold remains vulnerable to renewed selling on rebounds while the US Dollar and Treasury yields also show signs of stabilisation after Thursday’s declines. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.70, up 0.11%. The benchmark 10-year US Treasury yield stands at around 4.99%.

Data released on Friday showed the preliminary S&P Global Composite PMI eased to 57.6 in October from 58.4 in September. The Manufacturing PMI rose to 56.0 from 55.9, beating expectations of 55.6. Meanwhile, the Services PMI fell to 57.9 from 58.8, matching forecasts. Meanwhile, the University of Michigan’s final Consumer Sentiment Index was revised up to 48.0 from 46.3, while one-year and five-year inflation expectations held at 4.7% and 3.5%, respectively.

All eyes on the Fed next week

The US central bank is widely expected to leave interest rates unchanged after raising them by 25 basis points (bps) in September. Traders will watch how policymakers balance persistent inflation risks against concerns that a slowdown in AI-related investment could weigh on economic growth. Any signal that another rate hike remains possible in December could keep Gold on the back foot.

Technical analysis: $4,000 at risk as technical indicators favor sellers

On the daily chart, XAU/USD extends its correction below all major moving averages and retains a bearish near-term bias. Momentum conditions are weak, with the Relative Strength Index (RSI) hovering near 35 and edging toward oversold territory, and the Moving Average Convergence Divergence (MACD) indicator holding below zero with a negative reading, hinting that downside forces still prevail despite a modestly rising Average Directional Index (ADX) around 24 that points to a gradually strengthening trend.

On the topside, immediate resistance emerges at the psychological $4,100 level, followed by another horizontal barrier at $4,200, which reinforces the nearby 100-day Simple Moving Average (SMA) at $4,224 as a key hurdle for any recovery attempts. Above that, the 50-day SMA at $4,302 guards the path toward the $4,400 zone, while the 200-day SMA at $4,509 caps the broader bearish structure.

On the downside, failure to hold above the psychological $4,000 mark could trigger deeper losses, exposing the $3,950 level as initial support, followed by the $3,900 zone. A sustained break below the latter could open the door for a further decline toward $3,800.