$4200 Breakout Proves Elusive as Gold Fights Elevated Oil Prices
Gold is struggling to hold above $4,150 in Thursday's Asian trading, as it continues to face headwinds from elevated oil prices and higher US Treasury bond yields. The precious metal failed to capitalize on Tuesday's late rebound amid a renewed uptick in oil prices, following reports that diplomatic talks between the US and Iran yielded little progress.
The benign inflation data released earlier this week weighed heavily on October Fed rate hike bets, with markets now pricing in only a 38% chance of such a move. However, upbeat US second-quarter GDP and ADP private sector payrolls data have since put pressure back on gold prices.
Kashkari's hawkish message has reinforced the case for sustained restrictive policy, penciling in one more hike this year and another in 2027. The FXS Fed Sentiment Index slipped by 0.42 points to 143.28, signaling a modest pullback in hawkish intensity.
The technical analysis suggests that gold remains vulnerable while trading under the stacked daily SMAs and the downtrend resistance line. Any recovery attempts are expected to struggle with these levels acting as resistance.