Gold price (XAU/USD) rises to near $4,165 during the early Asian session on Wednesday. The precious metal rebounds as long-dated Treasury yields eased from Monday’s multi-decade highs and oil prices fell. Traders await the Minutes of the Federal Open Market Committee (FOMC), which are due later on Wednesday.
The benchmark 10-year Treasury yield declines more than 2 basis points (bps) to 5.286% after reaching its highest level since April 2002 in the previous session. The 30-year Treasury yield fell to 5.661% after rising to levels not seen since May 2002. The 2-Year Treasury dropped more than 3 bps to 4.798%.
Lower bond yields and falling oil prices eased concerns over inflation and the prospect of further US Federal Reserve (Fed) rate hikes, supporting the yellow metal.
Traders are now pricing in roughly 79.5% odds that the Fed will keep rates unchanged at its October policy meeting, according to the CME FedWatch tool.
The FOMC Minutes will take center stage later on Wednesday. This report could help determine the central bank’s future monetary policy after it raised interest rates last month for the first time in three years.
Gold steadies as US rate worries ease and ETF selling abates
Analysts at Commerzbank note that gold has “stabilised for the time being at around USD 4,150 per troy ounce,” as “concerns about a rapid interest rate rise in the US have eased somewhat recently.” They add that support is also coming from ETF investors who, “whilst they have not significantly increased their exposure recently, have at least not reduced it either,” helping to underpin prices. Looking further ahead, Commerzbank highlights that consultancy firm Metal Focus “is also optimistic and, in its annual publication, forecasts new record prices for 2027, based on what is likely to be a rise in investor interest in the medium term.”
Schmid flags AI-driven inflation, keeps Fed firmly hawkish
Fed’s Schmid delivers a notably hawkish tone, with an 8/10 FXS Speechtracker score standing modestly above the 7.5/10 historical average, underscoring a stronger-than-usual focus on inflation risks. The emphasis that the labor force “remains in a good place” alongside frustration with persistent inflation and a clear warning that AI is now “one of the largest drivers of inflation” frames price stability as the dominant policy priority. By stressing that the Fed’s credibility is at stake and that there is still work to do on the short rate despite higher long-term yields, the speech points to a bias toward keeping policy tight and potentially resisting premature easing that could weigh on the Dollar and support yields.
The FXS Fed Sentiment Index rises by 0.34 points to 137.91, reinforcing that the broader Fed communication backdrop remains firmly in hawkish territory well above the neutral 100 threshold. This incremental uptick, aligned with Schmid’s above-baseline hawkish score, signals that recent Fed rhetoric continues to lean toward restrictive policy, a backdrop typically supportive for the Dollar and consistent with elevated rate expectations.
Technical Analysis: Gold remains capped under the 100-day SMA
In the daily chart, XAU/USD remains under pressure as it holds below the 100-day simple moving average (SMA) and the Bollinger Bands’ middle line, keeping the near-term bias bearish despite the latest Relative Strength Index (RSI) reading at 40.69, which suggests only modest downside momentum rather than outright oversold conditions.
On the topside, initial resistance is clustered in the $4,265–4,270 area, where the Bollinger middle band and the 100-day SMA are likely to cap rebounds, ahead of a higher Bollinger upper band hurdle at $4,440. On the downside, immediate support emerges at the Bollinger lower band near $4,090, where a decisive break would open the door to a deeper corrective leg in the daily trend.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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