Gold struggles below $4,000 as Fed hike bets and Mideast risks lift USD to fresh YTD top

Gold prices struggled to stay above $4,000 on Thursday, hitting its lowest level in over a week. The US Dollar (USD) reached fresh year-to-date highs, buoyed by strong US consumer inflation data and the Federal Reserve's (Fed) anticipated rate hikes, as well as geopolitical tensions in the Middle East.

Earlier this week, the October US Consumer Price Index (CPI) report signaled further tightening of the Fed's monetary policy. Several influential officials from the Federal Open Market Committee (FOMC) also expressed hawkish sentiments, increasing the likelihood of another rate hike in December. This optimistic outlook drove the yield on the 10-year US government bond above the 5% threshold, supporting the USD.

Rabobank analysts pointed out that the market had fully priced in a December rate hike, with no speculation that political forces would hinder the Fed's actions. The midterm elections in the US suggested less pressure from the White House, reinforcing the Fed's ability to proceed with its tightening agenda.

Meanwhile, the ongoing US-Iran standoff over the Strait of Hormuz added to the geopolitical risks, with both nations striking nearby islands. This situation lifted the USD Index (DXY), which tracks the Greenback against a basket of currencies, pushing it to its highest level since April 2025.

Traders anticipate key data releases, such as the Weekly Initial Jobless Claims report from the US and speeches from Fed officials. However, the gold price appeared more likely to decline, as resistance levels at $4,009 and $4,041 were looming overhead. The Moving Average Convergence Divergence (MACD) indicator turned marginally positive, but the Relative Strength Index (RSI) remained near 31, indicating potential stabilization rather than a decisive reversal.