Above $4,000: gold rebounds on hopes of easing US‑Iran tensions

• $4,010 is back in sight for Gold. The price recoups part of its losses in early Asian trading on Tuesday.
• Gold draws some support from expectations that US-Iran hostilities will ease.
• Wednesday’s October meeting is likely to see the Fed keep interest rates unchanged.

$4,010 is the level Gold price (XAU/USD) has recovered to. The rebound in Tuesday’s early Asian session ends a two-day losing run. Softer oil prices are easing inflation worries ahead of this week’s US Federal Reserve (Fed) meeting, helping the precious metal edge up.

Expectations of reduced hostilities between the US and Iran have sent oil prices sharply lower. On Monday, Saudi Arabia’s Defence Minister met Iranian leaders in Tehran to try to defuse simmering tensions between the two countries, CNBC reported. The development eased inflation worries somewhat, although that relief may not last.

Bob Haberkorn, senior market strategist at StoneX, said: “There’s been a bit of a pullback in crude oil, which is helping gold, while some bargain-hunting is also coming in,” adding: “I think it’s going to be light trading here and we’re going to hang around the $4,000 level into the Fed announcement to see what they have to say,”

Wednesday’s Fed rate decision will be the main focus. Following September’s increase, the US central bank is widely expected to maintain its 3.75% to 4.00% interest rate range at the forthcoming October meeting.

According to the CME FedWatch tool, markets assign around a 10% probability to another quarter-point Fed rate increase on Wednesday. Nearly 82.3% anticipate at least one increase before year-end.

$4,000 test for Gold bulls as CTAs turn short

A downside bias in positioning is emerging as prices test this key threshold. TD Securities says “the long-term gold bull thesis faces a test near the $4,000/oz level, with CTAs now short across all signals.” The bank adds that “CTAs have already been heavy sellers in gold, with systematic funds firing short across all momentum indicators,” underscoring the bearish positioning.

Even so, TD Securities highlights the market’s resilience: “spot and futures pricing has traded below the key $4,000/oz level, however the market has again shown signs of being extremely resilient with prices recovering in fairly short order.” Support from investment flows and official-sector buying remains relevant. The bank adds that “despite the near-term easing of ETF flows, the trend remains supportive, while central bank demand has been a key upside driver, particularly when prices are within this territory.”

A sustained rise above the threshold for CTA short-covering could strengthen Gold’s still broadly supportive backdrop. On positioning, TD Securities notes that “CTAs would start to cover shorts north of $4,092/oz,” indicating the potential for buying to close short positions above that level.

5.6/10 Warsh speech: Investment and AI in focus, Fed path uncommitted

A 5.6/10 reading on the FXS Speechtracker puts Fed Chair Warsh’s speech modestly below the historical average of 6.1/10. The score suggests a slightly less impactful tone than the established baseline, although the overall message was largely unchanged. Warsh’s admission of being “over-scarred from the global financial crisis” signals caution. At the same time, he points to structural growth and an investment surge underpinned by “good policies,” declines to prejudge the October and December meetings, and emphasises spillovers between US policy and the rest of the world. His focus on AI as both a near-term driver of demand and a means of improving confidence in data sits alongside attention to financial stability and tail risks. Together, these themes indicate a risk-aware approach favouring continued policy vigilance, rather than an immediate change in the Fed’s reaction function.

At 127.51, the FXS Fed Sentiment Index recorded a 0.00-point change, remaining firmly in hawkish territory after the speech. Set against the slightly softer FXS Speechtracker score, the unchanged, elevated index suggests markets perceive no significant adjustment to the Fed’s hawkish bias. Warsh’s caution and emphasis on investment and AI are viewed as compatible with a continuing preference for tight conditions.

100-day SMA caps Gold: Technical Analysis keeps a negative outlook

Holding comfortably above both the 100-day simple moving average (SMA) and the 20-day Bollinger middle band, XAU/USD retains a bullish near-term bias on the daily chart. The latest consolidation has therefore left the broader uptrend intact. A position above the lower Bollinger band also points to a cushion against further declines. Meanwhile, the Relative Strength Index (RSI), at 35.20, is edging towards oversold territory. This suggests selling momentum may be fading, rather than indicating a reversal of the trend.

The lower Bollinger band at $4,020 marks immediate downside support. Next come the Bollinger midline near $4,130 and the 100-day SMA at $4,220, forming a concentrated demand zone that underpins the bullish structure. The current indicators identify no nearby resistance. Provided daily closes hold above the $4,020 technical floor, a recovery from this support zone could prompt buyers to try to regain control and target recent highs.

(The technical analysis of this story was written with the help of an AI tool. Learn more.)