Gold Falls Below $4,100 as Dollar Strength and Rate Fears Pressure Bullion

Summary:

Gold falls to around $4,059, its lowest level since August 5, as a stronger US Dollar and expectations of elevated interest rates outweigh safe-haven demand. Rising oil prices and next week’s Fed meeting remain key drivers for bullion.

Sell XAUUSD

End Time

CLOSED

4068.00

ENTRY

3960.00

TGT

4150.00

4026.92 +2.58 +0.06%

4162

Points

Profit

3960.00

TGT

4026.38

CLOSING

4068.00

ENTRY

4150.00

Gold prices extended their decline on Thursday, falling below $4,100 to around $4,059, the lowest level since August 5, as a recovering US Dollar and rising inflation concerns weighed on the precious metal. Despite escalating geopolitical tensions in the Middle East, expectations of prolonged restrictive monetary policy are limiting gold’s safe-haven appeal.

Fresh reports of potential military escalation have heightened concerns about energy supply disruptions. The New York Times reported that the United States and Israel had drawn up plans for renewed strikes against Iran following the US midterm elections, potentially targeting Iranian energy infrastructure. Meanwhile, reported attacks on Saudi Arabia’s Shaybah oil field and King Fahd International Airport have added to regional uncertainty, prompting Washington to order non-emergency government personnel and their families to leave Saudi Arabia.

These developments have pushed oil prices higher, with West Texas Intermediate crude rising 1.40% toward $100 per barrel, reaching its highest levels in approximately five weeks. The surge in energy prices has intensified concerns that inflation could remain elevated across major economies, complicating the outlook for central banks.

For gold, the consequences are significant. Although bullion traditionally attracts demand during periods of geopolitical instability and serves as an inflation hedge, it does not generate interest income. If rising energy costs force central banks to maintain higher borrowing costs for longer, investors may favor yield-bearing assets over gold. In my assessment, this conflict between safe-haven demand and interest rate expectations is a key reason why escalating geopolitical risks have failed to prevent the latest sell-off.

Attention is now turning to next week’s Federal Reserve meeting, where policymakers are widely expected to leave interest rates unchanged following September’s 25-basis-point increase. However, markets are pricing in an 89% probability of another rate hike in December, according to the CME FedWatch Tool. Any indication that the Fed intends to maintain a restrictive stance could provide further support for the US Dollar and create additional headwinds for bullion.

The US Dollar Index has recovered to around 101.78 after recently touching a three-week low of 101.45. Meanwhile, the 10-year US Treasury yield stands near 5.04%, despite declining by more than 1% on the day. The recent correction in the Dollar had been associated with falling Treasury yields as concerns over AI-related investments weighed on equities and increased demand for government bonds.

For the near term, gold’s direction will depend on whether geopolitical uncertainty generates enough safe-haven demand to offset the pressure from a stronger Dollar and expectations of elevated interest rates. With bullion trading at its lowest level since early August, further downside remains possible if hawkish Fed expectations strengthen. However, any escalation that significantly increases demand for defensive assets could trigger a recovery, making the upcoming policy meeting particularly important for market direction.

Technical Analysis

Gold remains under strong selling pressure on the H4 timeframe, trading around $4,068 after breaking below the $4,110–$4,120 support zone. The recent price action shows a clear sequence of lower highs and lower lows following the rejection near $4,200, indicating that sellers continue to dominate the market. The latest bearish move has also pushed price below the $4,080–$4,090 area, reinforcing the downside structure.

The $4,110–$4,120 zone has now shifted from support to potential resistance. If gold rebounds toward this area but fails to reclaim it, sellers could regain momentum and drive another leg lower. The nearer $4,080–$4,090 region may also act as resistance during any short-term recovery.

On the downside, a sustained break below $4,060 could expose $4,030, followed by the psychological $4,000 level. If selling pressure continues through these intermediate supports, the next major target lies around $3,955–$3,960, consistent with the projected move on the chart.

A temporary rebound remains possible after the sharp decline. However, buyers would need to recover $4,090 and subsequently break above $4,120 to weaken the immediate bearish structure. Until then, rallies toward resistance may attract renewed selling, while a decisive breakdown below $4,060 would strengthen the case for further losses.

TRADE RECOMMENDATION

SELL XAU/USD

ENTRY PRICE: 4068.00

STOP LOSS: 4150.00

TAKE PROFIT: 3960.00

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Warren Takunda

Analysts

Warren Takunda, a seasoned finance leader specializing in the Middle East, is a trusted senior analyst with a proven track record. As head of the finance team, he excels in financial planning, analysis, and reporting. Warren's expertise in financial modeling and investment analysis delivers valuable insights to clients.

Rank

Articless

3150

Win Rate

63.78%

P/L Ratio

0.73

Focus on

XAUUSD, EURUSD, GBPUSD

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