Gold prices are showing mild gains in early European trading but remain constrained below the $4,200 mark, as a two-week trading range continues to cap gains. The US Dollar has retreated from its highest level since April 2025, offering some support to the precious metal. However, the Federal Reserve's hawkish stance and rising geopolitical tensions in the Middle East are limiting deeper losses for the Dollar, keeping gold under pressure.
The minutes from the Federal Open Market Committee's September meeting emphasized the possibility of another quarter-point rate hike before the end of 2026, citing elevated inflation. Cleveland Fed President Beth Hammack's hawkish comments reinforced market expectations of further tightening, with the FXS Speechtracker score at 8.4/10, well above the historical average. The Fed's hawkish sentiment, supported by the FXS Fed Sentiment Index at 138.92, suggests continued Dollar strength, which typically weighs on gold.
Geopolitical risks, including escalating conflicts between the Iran-backed Houthi group and Saudi Arabia, are keeping the safe-haven Dollar in demand. US President Donald Trump's remarks about potential strikes on Iran further amplify these risks, potentially capping gold's upside. Traders are awaiting key US inflation data, including the Consumer Price Index (CPI) and Producer Price Index (PPI), for more clarity on the Fed's future policy path.
Technically, gold remains within a two-week trading range, with resistance near $4,204 and $4,218. Support is seen at $4,117, with a break below potentially triggering further declines. The MACD indicator suggests fading upside momentum, while the RSI indicates a modestly cooling bullish tone. Analysts at Societe Generale highlight that a pickup in core inflation to 2.5% could solidify expectations for a December rate hike, further pressuring gold.