Gold holds gains above $4,150 as traders trim bets on Fed rate hikes

• Gold price edges higher to around $4,160 in Monday’s early Asian session. 
• Softer US jobs data have strengthened investor bets that the Fed will keep rates on hold later this month.
• Oil-driven inflation concerns might cap the Gold’s upside.  

Gold price (XAU/USD) gains momentum to near $4,160 during the early Asian trading hours on Monday. The precious metal rebounds as weaker-than-expected US Nonfarm Payrolls (NFP) data weigh on the US Dollar (USD). 

Traders trim bets on US Federal Reserve (Fed) rate hikes after jobs data. US NFP rose by 29K in September, according to the US Bureau of Labor Statistics (BLS) on Friday. This figure followed the 133K increase seen in August (revised from 162K) and missed the market expectation of 90K.

Markets currently see about a 22.1% chance of a US rate hike this month, compared to around 70% earlier in the week, the CME FedWatch Tool showed. It’s worth noting that higher interest rates typically weigh on gold because the precious metal does not pay interest, making yield-bearing assets relatively more attractive.

Nonetheless, rising oil prices amid ongoing US-Iran conflicts could raise inflation concerns, weighing on the yellow metal. Iran’s Foreign Ministry spokesman Esmaeil Baqaei said on Sunday that the Strait of Hormuz is the main focus of Iran’s negotiations to end the war with the United States (US). 

Meanwhile, Parliament speaker Mohammad Bagher Ghalibaf said that Tehran is not backing down from its conditions for opening the critical waterway, denouncing recent alleged US proposals as “unilateral demands.”

Gold eases as elevated real yields cap bullion’s upside despite softer us pce

According to analysts at UOB Group, “Gold spot was softer at $4,156/oz as elevated real yields capped the bullion’s upside,” with the metal ultimately “revers[ing] earlier gains – which saw it trade as high as $4,219/oz – to close 0.6% lower at $4,157/oz as elevated real yields continued to cap the bullion’s upside.” On the macro front, UOB Group notes that “US headline PCE rose 0.3% m/m in Aug, in line with estimates, while the y/y rate fell to 3.4% from 3.7% in prior month,” adding that recent “BEA methodology revisions improved the optics but did not materially alter the underlying inflation narrative.”

Logan’s hawkish tilt boosts Fed rate expectations and supports the Dollar

Fed’s Logan delivers a distinctly more hawkish tone, with the 9.2/10 FXS Speechtracker score standing well above the 8.1/10 historical average, signaling a stronger inclination toward further tightening compared to the established baseline. The emphasis that higher yields may reflect increased term premiums, potentially reducing the need for additional tightening, is overshadowed by explicit calls for at least 50 bps more in rate hikes and several additional moves to revive price stability, underscoring a clear bias toward higher rates and a supportive backdrop for the Dollar. Logan’s characterization of policy as not yet restrictive, alongside a strengthening economic expansion and balanced labor market, reinforces the message that the Fed is prepared to push rates higher until inflation credibly converges to 2%.

The FXS Fed Sentiment Index rises by 1.68 points to 136.59, firmly in hawkish territory and consistent with the elevated FXS Speechtracker reading. This move confirms that market-implied Fed rhetoric has shifted further toward sustained tightening, reinforcing expectations of additional rate hikes and underpinning a structurally stronger Dollar narrative.

Technical Analysis:

In the daily chart, XAU/USD keeps a bearish near-term bias as price holds below the 100-day simple moving average (SMA) and the Bollinger middle band. The metal is hovering just above the lower Bollinger band support, indicating that the recent slide is pressing into the lower edge of the current volatility envelope. The Relative Strength Index (14) at 39.50 sits in bearish territory but shy of oversold, hinting at persistent downside pressure rather than exhaustion.

On the topside, initial resistance is clustered around the Bollinger middle band at $4,275 and the 100-day SMA at $4,275, a dense cap that would need to be reclaimed to ease the bearish tone, with a subsequent barrier at the upper Bollinger band near $4,445. On the downside, immediate support is located at the lower Bollinger band at $4,102.30; a clear break beneath this floor would open the door to a deeper correction, while a hold above it would keep XAU/USD in a corrective bearish phase within the broader range.

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