Global gold prices remained under pressure during Friday’s trading session, though XAU/USD managed to climb back to around $4,019 per troy ounce—recovering after having dipped below the psychological $4,000 mark to hit a three-month low. This rebound remains limited and has not yet fully shifted the bearish sentiment currently weighing on gold.
Gold continues to face pressure stemming from expectations regarding Federal Reserve policy. Although Fed officials have indicated there is no immediate urgency to raise interest rates, the market still assigns an approximately 80% probability that the U.S. central bank will hike rates again at its December meeting.
Inflation concerns have also resurfaced as crude oil prices remain near one-month highs. The conflict in the Middle East—including escalating tensions between Saudi Arabia and the Houthi group in Yemen—has raised concerns regarding the security of airports and energy infrastructure, which have become targets for drone and missile attacks.
Geopolitical risks have intensified following a warning from Iran’s Islamic Revolutionary Guard Corps that any new U.S. attack could prompt Tehran to expand its military response to neighboring countries and bases utilized in U.S. military operations. Reports regarding potential new U.S. and Israeli military operations against Iran following the U.S. midterm elections have also kept the geopolitical risk premium elevated.
Meanwhile, expectations for a persistently hawkish U.S. interest rate stance have helped the U.S. dollar recover from a three-week low, placing further downward pressure on gold. Nevertheless, investors appear to be maintaining aggressive positions ahead of next week’s FOMC meeting, where interest rates are widely expected to remain unchanged.
Market focus will subsequently shift toward the Fed’s policy decision, the accompanying policy statement, and commentary from Fed Chair Kevin Warsh. Investors are also awaiting preliminary data on U.S. economic growth for the third quarter, as well as the Personal Consumption Expenditures (PCE) price index—the Fed’s preferred gauge of inflation. The outcome of this data series will determine whether gold can strengthen its recovery above US$4,019 or if it will be pushed back down below US$4,000. (srh)