Gold Struggles to Regain $4,200 as Inflation Fears Ease

Gold prices are struggling to break past the $4,200 mark, despite a rebound at the start of the week. The precious metal is currently testing resistance near the $4,150 level, as easing oil prices reduce inflation concerns and support the Federal Reserve’s stance on keeping interest rates steady in October.

The recent drop in oil prices was driven by expectations of increased supply, including a G7 agreement to release 100 million barrels from emergency reserves. This offset reports of attacks on Saudi oil facilities and maintained output targets from OPEC+. Meanwhile, the weaker-than-expected US Nonfarm Payrolls report shifted market expectations toward a Fed rate pause, boosting gold’s appeal as a non-yielding asset.

However, the ongoing strength of the US Dollar remains a challenge for gold, despite some analysts suggesting that the Dollar’s rally may be temporary. Geopolitical risks, including tensions in the Strait of Hormuz and Russia’s threats against Ukraine, could reignite oil price volatility and inflation fears, potentially weighing on gold if Treasury yields rise.

Technically, gold is trading at $4,136.75, with key resistance levels at $4,274.80 and $4,327.92. A break below $3,999.52 could signal further declines, while stabilization above current levels may attract more buyers.