HG MARKETS: 

Gold remains under bearish pressure after falling below the $4,000 psychological level and touching a three-month low. Despite a modest recovery, the precious metal continues to struggle as a stronger US dollar and rising expectations of further Federal Reserve tightening limit its upside.

Markets are pricing in approximately an 80% chance of another US interest rate hike in December. Although Fed officials have indicated that there is no immediate urgency to raise rates, persistent inflationary pressures are keeping traders cautious. Higher interest rates generally weigh on gold because it does not offer interest income.

Crude oil prices remain near a one-month high amid escalating geopolitical tensions in the Middle East. Intensifying hostilities involving Saudi Arabia and Yemen’s Iran-backed Houthi movement have raised concerns about potential disruptions to regional energy supplies, adding to inflationary risks.

Meanwhile, Iran has warned that renewed US attacks could trigger a broader regional conflict, including strikes on neighbouring countries and military bases used by US forces. These developments have increased uncertainty across global financial and commodity markets.

Technical Outlook: Gold’s sustained break below $4,100 has strengthened the bearish outlook. The Relative Strength Index (RSI) stands at 34.34, near oversold territory, while the MACD remains negative at -6.51, indicating continued downside momentum. Immediate resistance lies at $4,065–$4,070, followed by $4,100. A break above $4,100 could open the way towards $4,170 and $4,200, while failure to recover may leave gold vulnerable to further declines.

Additional geopolitical concerns stem from reports that the US and Israel have developed plans for a potential military campaign against Iran following the US midterm elections. Although such risks typically support gold’s safe-haven appeal, expectations of tighter US monetary policy and a recovering dollar are currently limiting gains.

Attention is now shifting towards next week’s two-day Federal Open Market Committee (FOMC) meeting. The Fed is widely expected to keep interest rates unchanged, making its policy statement and Chair Kevin Warsh’s press conference particularly important for clues about the future direction of monetary policy.

Investors will also monitor the upcoming US third-quarter GDP report and Personal Consumption Expenditures (PCE) Price Index. Strong economic growth or persistent inflation could reinforce expectations of tighter monetary policy, potentially supporting the dollar and putting further pressure on gold. Conversely, weaker data could ease rate concerns and provide some relief to bullion.