Gold breaks $3,886 floor to new YTD low as Fed hawks press on

Gold (XAU/USD) plummeted to a new year-to-date low of $3,880 on Friday, breaking the $3,900 threshold for the first time since October last year. This decline was driven by rising US Treasury yields, a strengthening Greenback, deteriorating risk appetite and hawkish remarks from the Federal Reserve. The precious metal closed at $3,884, down over 3.3%.

The price action indicates more downside potential after breaching the crucial support level of $3,886 on October 28, 2025. Two of the three Fed officials called for additional rate hikes, while the remaining three favored a more gradual approach. Dallas Fed President Lorie Logan advocated for two more rate hikes, and St. Louis Fed President Alberto Musalem stated that policy remains too loose.

Richmond Fed President Thomas Barkin, however, favored a gradual approach, acknowledging the presence of inflationary pressures. Despite these developments, the US Dollar failed to rise, and US Treasury yields dipped. The US economy grew by 3.4% year-over-year in Q3, surpassing expectations. Core PCE inflation stood at 3.1% year-over-year, higher than September's reading but in line with forecasts.

Despite this, the likelihood of a Fed rate hike reduced from 84% to 70% following the Fed's decision. Bullion prices were also dragged down by the rise in energy prices, even though talks between the US and Iran were ongoing, according to Axios. West Texas Intermediate (WTI), the US crude benchmark, increased slightly to near $102 per barrel.

Upcoming economic data in the US will include October ISM Manufacturing and Services PMIs, jobs data, and the highlight Nonfarm Payrolls. The overall market sentiment is bearish, with the Relative Strength Index (RSI) signaling a downtrend. A close below the October 28, 2025 low of $3,886 could open the door to a 12-month low at $3,800, followed by a test of the April 22, 2025 swing high-turned-support at $3,500.

For a bullish reversal, the metal must surpass $3,900 and $4,000, paving the way for a test of the $4,100 mark and the 100-day Simple Moving Average (SMA) at $4,213.