Gold Struggles Between Fed Rate Hike Bets and Stronger Dollar

Gold (XAU/USD) is seeing mild gains at the start of the week but remains stuck in a narrow range. The metal faces pressure from a stronger US Dollar and elevated Treasury yields, even as expectations of further Federal Reserve interest rate hikes have eased. At the time of writing, XAU/USD is trading around $4,158, up 0.35% on the day.

Recent weak US economic data, including a lower-than-expected September Nonfarm Payrolls report, has reduced the likelihood of a Fed rate hike in October to just 20%. However, policymakers remain focused on inflation concerns, which limits Gold's upside potential. The US Dollar Index (DXY) has risen to 102.20, supported by political and fiscal concerns in France. Meanwhile, the 10-year US Treasury yield is holding near 5.29%, making Gold less attractive as a non-yielding asset.

Looking ahead, key US economic data releases include the ISM Services PMI, FOMC meeting minutes, and Initial Jobless Claims. Technical analysis shows Gold struggling to reclaim the $4,200 level, with immediate support at $4,100. Economists at Deutsche Bank maintain their view of two further 25 basis point Fed hikes, despite the softer payroll data.