Gold edges lower as traders weigh Fed-speak and US-Iran talks

Gold (XAU/USD) struggled to build upon its slight recovery from sub-$4,300 levels on Wednesday, as Asian markets witnessed a fresh influx of the precious metal. The US Dollar (USD) maintained its robust gains, breaking the highest level since July 30, during the Federal Reserve's (Fed) hawkish statement. This hawkish outlook, coupled with the Fed's decision to raise interest rates for the first time in over three years, is believed to be a significant factor negatively impacting gold's price.

The US central bank not only increased rates but also indicated that another hike is expected this year. Moreover, Fed officials like St. Louis Fed President Alberto Musalem and Chicago Fed President Austan Goolsbee expressed their support for further policy tightening, as elevated inflation risks persisted. In addition, other regional Fed presidents, such as Susan Collins from Boston and Tom Barkin from Richmond, left the door open for future interest rate hikes to curb inflation.

The CME Group's FedWatch Tool indicated a 90% probability of a rate hike in December, further bolstering the strength of the Greenback. Additionally, the Middle East tensions and tighter US sanctions on Iranian aviation added to the geopolitical uncertainties, which also favor the USD bulls and weigh on gold prices.

Despite these factors, US bond yields remained depressed below multi-year highs due to the recent decline in crude oil prices, which helped alleviate fears of runaway inflation. This situation could potentially limit losses for gold traders. Traders now monitor the release of flash global PMIs to assess the health of major economies and FOMC meetings for short-term opportunities around the Gold price.

The XAU/USD pair is currently trading below the 100-period Exponential Moving Average (EMA) at $4,369. It sits just above the 50.0% retracement of the $3,934.91–$4,694.41 leg. Momentum indicators show mixed signals, with the Relative Strength Index (RSI) at 47.86 nearing neutral, and the Moving Average Convergence Divergence (MACD) displaying a negative reading at -9.80, suggesting waning bullish pressure. Consequently, the near-term bias remains slightly bearish, and gold continues to trade under the EMA.

Support levels for gold are observed at the 50.0% retracement near $4,314, and deeper Fibonacci levels at $4,225 (61.8%) and $4,097 (78.6%). Above these levels, resistance is initially found at the 100-period EMA at $4,369, followed by the 38.2% retracement at $4,404. A daily close above these levels could alleviate bearish pressure and open the path to higher resistance bands around $4,515 and the cycle high area near $4,694.