Gold Struggles Below $4,200 as Market Awaits Fed Clarity

Gold prices faced another challenging week, struggling to hold above the $4,200 mark as the market opened on Monday. The precious metal rebounded slightly, testing resistance near $4,150, driven by a retreat in oil prices that eased inflation concerns and supported expectations of steady interest rates from the US Federal Reserve.

The recent decline in oil prices was sparked by the G7's agreement to release 100 million barrels of diesel and crude from emergency reserves, coupled with reports of increased crude oil exports from the Middle East. These developments countered concerns over supply disruptions caused by geopolitical tensions, including attacks on Saudi Aramco sites and the Houthis' actions in Yemen.

The weak US Nonfarm Payrolls report on Friday further dampened expectations of a Fed rate hike in October, pushing the odds of a pause above 80%. This shift helped non-yielding assets like gold recover some ground, although the strengthening US dollar continued to pose a challenge. TD Securities noted that the payrolls data only marginally weighed on the USD, making it difficult to predict persistent bullish signals for the dollar.

Geopolitical risks, including threats from Iran and Russia's escalation in Ukraine, could revive oil prices and inflation concerns, potentially weighing on gold if US Treasury yields rise. The focus will now shift to the US ISM Services PMI data and Fed policymaker speeches, which could influence the Fed's rate hike decision and impact gold price dynamics.

Technically, gold remains bearish in the near term, trading below key moving averages. The 100-day, 50-day, and 200-day SMAs all sit above the current price, suggesting a downside bias despite the broader uptrend. The Relative Strength Index hints at lingering negative momentum, with immediate support around $4,136.75 and a critical floor near $3,999.52.