Gold (XAU/USD) declined by nearly 1.20% on Wednesday, falling to around $4,114 as the US Dollar (USD) and Treasury yields rebounded. The US Dollar Index (DXY) traded near 102.30, while the 10-year Treasury yield rose to 5.324%, approaching its highest level since 2002. Higher borrowing costs and a stronger Dollar increased the opportunity cost of holding non-yielding assets like Gold.
Despite the drop, Gold remains within a consolidation range between $4,100 and $4,200. Traders are reassessing the Federal Reserve’s monetary policy path after recent softer-than-expected US employment and inflation data. Markets expect the Fed to keep rates unchanged at its October 27-28 meeting but remain cautious about potential tightening in December due to persistent inflation risks.
Analysts at ING noted that central banks continued buying Gold in August, adding 39 tonnes to their reserves. China led the purchases with 20 tonnes, extending its buying streak to 22 consecutive months. Poland and Uzbekistan also added 8 tonnes each, reflecting ongoing demand for Gold as a reserve asset.
Technically, Gold remains below key moving averages, with a bearish bias. The $4,100 level acts as immediate support, while resistance is seen at $4,200 and $4,267. A break below $4,100 could push Gold toward year-to-date lows near $4,000-$3,950.