Gold Holds Gains Amid Mixed Cues and Geopolitical Tensions
Gold prices maintained modest gains during the early European trading session on Monday, despite being constrained within a one-week trading range. The commodity found support as expectations for a Federal Reserve rate hike in October faded, pulling US bond yields away from multi-year highs. However, the US Dollar surged to its highest level since April 2025, limiting gold's upside potential.
The US Nonfarm Payrolls report revealed that the economy added 29,000 new jobs in September, falling short of the revised 133,000 from the previous month and the 90,000 estimate. The unemployment rate rose to 4.2% from 4.1% in August, while annual wage growth slowed to 3.0%, its lowest pace since May 2021. This data, combined with softer US inflation figures released last week, reduced pressure on the Fed to raise interest rates, keeping US bond yields depressed and benefiting gold.
Analysts at ABN Amro described the latest US labor market report as consistent with their base case, noting that the three-month average of 51,000 new jobs is solid but does not indicate a hot or tight market. They maintained that persistent inflationary pressure from the energy shock is likely to prompt one more Fed hike in December. However, the CME Group's FedWatch Tool shows an 85% chance of a rate hike by the end of the year.
Geopolitical tensions in the Middle East and the widening Russia-Ukraine war continue to boost the safe-haven US Dollar. Iran's Foreign Minister stated that there is no military solution to the conflict with the US, while Iranian parliament speaker Mohammad Bagher Ghalibaf said the Strait of Hormuz will remain closed until conditions are met. Meanwhile, military operations in Yemen and Russian air strikes on Ukraine have kept the geopolitical risk premium in play, favoring USD bulls.
Technical analysis shows that the XAU/USD pair maintains a bearish near-term tone below the 100-period Simple Moving Average on the 4-hour chart and the 61.8% Fibonacci retracement level at $4,225.30. The Relative Strength Index (RSI) at 40.92 hovers below the midline, while the Moving Average Convergence Divergence (MACD) indicator slips into negative territory, suggesting waning upside momentum.