Gold bounces off $4,150 amid modest USD pullback but stays in two-week-old range

Gold prices briefly touched $4,150 during Asian trading on Tuesday, halting a recent decline from the upper edge of a two-week range. The US Dollar (USD) retreated from its April 2025 high as investors chose to take profits, providing support for the commodity. However, the Federal Reserve's cautious tone and ongoing Middle East tensions may hinder further declines in the US currency, prompting some caution before aggressive bullish bets on gold.

Fed minutes from the September 15-16 meeting hinted at another rate hike before the year's end, while Cleveland Fed President Beth Hammack's hawkish remarks reinforced the likelihood of further policy tightening. The Federal Open Market Committee (FOMC) minutes emphasized the possibility of another quarter-point increase in rates by year-end, bolstered by Hammack's strong hawkish comments.

The increased focus on raising interest rates and the potential for persistent inflation above the 2% target raises the likelihood of further Fed rate hikes, supporting the dollar and constraining gold's upside potential. The pair remains trapped in a two-week-old trading range, below the 100-period Simple Moving Average (SMA) on the 4-hour chart, indicating a bearish bias.

Analysts at Societe Generale stress that the upcoming US Consumer Price Index (CPI) and Producer Price Index (PPI) releases on Wednesday and Thursday will be key for near-term Fed assessments. A rise in core inflation to 2.5% could leave the market's expectations unchanged, but a hike in December and another in Q1 remains likely.

Gold's price remains constrained by support near the 100-period SMA at $4,204 and the top of the trading range at $4,218, with the 61.8% Fibonacci retracement at $4,241 as the next hurdle before a broader supply cluster forms between $4,328 and $4,415.