Gold (XAU/USD) Falls Below $4,000 as Hawkish Fed Expectations Mount

Gold (XAU/USD) extended its decline during Friday's European session, sliding below the key psychological level of $4,000 to reach a new monthly low. The non-yielding asset experienced a second consecutive session of selling pressure as robust US economic data bolstered expectations of further policy tightening by the Federal Reserve.

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US economic releases on Thursday signaled economic resilience alongside persistent inflationary pressures. Preliminary third-quarter GDP growth accelerated to an annualized rate of 3.4%, surpassing the previous quarter's 2.2% and consensus forecasts of 3.2%. Furthermore, the Personal Consumption Expenditures (PCE) Price Index for September rose 0.5% month-over-month and 3.6% year-over-year, while Core PCE advanced 0.3% monthly and 3.1% annually. These metrics have strengthened market bets on potential Fed interest rate increases as early as December.

Despite the hawkish monetary outlook, US Treasury yields declined as investors sought refuge in government bonds following weak corporate earnings from the technology sector. The US dollar faced modest downward pressure amid diplomatic developments in the Middle East, though this factor was insufficient to reverse gold's prevailing bearish bias.

Geopolitical headlines provided mixed signals. US Vice President JD Vance reportedly messaged Mohsen Rezaei, Secretary of Iran's Supreme National Security Council, to propose resuming peace talks, while Qatar delivered an updated peace proposal to Tehran. However, geopolitical risk premiums remain elevated due to continued conflicts involving Saudi Arabia and Iran-backed Houthis in Yemen, as well as reports of potential US and Israeli strikes following the US midterm elections. Concerns over supply disruptions also resurfaced after the Iranian Navy reported four oil tankers struck mines in the Strait of Hormuz, driving crude prices higher.

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XAU/USD Technical Outlook

From a technical perspective, XAU/USD maintains a clear bearish trajectory. Spot prices remain below major moving averages, while technical indicators remain in negative territory, confirming sustained selling pressure. Any corrective recovery attempts are likely to encounter overhead resistance.

Immediate resistance is aligned at the 4,025–4,030 horizontal zone. A decisive breakout above this barrier could trigger short-covering, targeting $4,065 followed by the psychological $4,100 resistance level. A sustained consolidation above this supply zone is required to neutralize the near-term downside bias.

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