Gold Holds Near $4,131 as Fed Hike Odds Drop
Gold (XAU/USD) is currently trading near $4,131, gaining support from weaker-than-expected U.S. jobs data. The softer employment figures have significantly reduced the likelihood of a Federal Reserve rate hike in October, with the odds plummeting from 70% to just 22%. Despite this near-term relief, the market still anticipates a rate increase in December, which continues to exert downward pressure on gold prices.
The technical outlook for gold remains neutral-to-bearish as long as prices stay below the key resistance levels of $4,172 and $4,191. Elevated Treasury yields and a strong U.S. dollar are major constraints, limiting gold's upside potential despite improving fundamental conditions. The structural outlook, however, remains constructive due to robust central bank demand and record ETF inflows, which provide long-term support for the metal.
Central banks, particularly China, are major buyers of gold, with the People’s Bank of China purchasing 20.2 tonnes in August. This buying spree is part of a broader strategy to diversify reserves amid geopolitical uncertainties. Additionally, gold ETF holdings have reached record levels, reflecting a shift toward longer-term institutional ownership. These factors help sustain gold's structural strength, even as higher yields and a firm dollar cap its short-term gains.
From a technical perspective, gold faces immediate resistance at $4,172, followed by $4,191 and $4,227. Support levels are identified at $4,112, with further downside risks at $4,070 and $4,021. The Relative Strength Index (RSI) remains neutral, but the bearish bias persists below $4,191.