Gold prices (XAU/USD) rose to near $4,180 during the early Asian session on Friday, rebounding as US Treasury bond yields retreated from multi-decade highs [1]. The US 10-year Treasury yield eased to 5.24% after spiking to 5.34%, marking a new multi-decade peak, while the 30-year Treasury bond yield hovered near levels not seen in 24 years before moderating into the close [1]. Geopolitical uncertainty, particularly surrounding stalled US-Iran ceasefire discussions, continues to provide a safe-haven underpinning for gold, while higher oil prices remain an inflation risk, according to Manav Modi, commodity analyst at Motilal Oswal Financial Services Ltd [1].
Market participants are closely watching the upcoming US September employment data, which could influence the US interest rate path. Economists expect Nonfarm Payrolls to show an increase of 90,000 job additions in September, compared to 162,000 in the prior month, with the Unemployment Rate projected to remain unchanged at 4.1% [1]. The CME FedWatch Tool indicates markets are pricing in a 24.9% chance of a Fed rate hike in October and a 79.4% probability of an increase in December [1]. David Meger, director of metals trading at High Ridge Futures, noted that any factors increasing the likelihood of a Fed rate hike, such as strong energy price rises or escalation in the Middle East, would negatively impact gold market sentiment [1].
Despite the rebound, gold spot reversed earlier gains—trading as high as $4,219/oz—to close 0.6% lower at $4,157/oz, as elevated real yields continued to cap bullion's upside, according to analysts at UOB Group [1]. On the macro side, US headline PCE rose 0.3% month-over-month in August, in line with estimates, while the year-over-year rate fell to 3.4% from 3.7% in the prior month. Recent BEA methodology revisions improved the optics but did not materially alter the underlying inflation narrative [1].
Technical analysis indicates gold retains a negative outlook below the 100-day SMA, with price holding below key moving averages and the 14-day Relative Strength Index at 40.83 suggesting subdued bullish momentum and downside exposure [1]. Initial resistance is noted at the 100-day MA at $4,285 [1].
CONCLUSION
Gold's recovery above $4,150 is tempered by retreating US yields and persistent inflation concerns. Market sentiment remains cautious ahead of the US September jobs data, with elevated real yields and technical resistance capping upside potential. The likelihood of further Fed rate hikes and geopolitical risks continue to weigh on gold's near-term outlook.