Gold market on hold: A stifled situation amid the Fed's hawkish signals, at a crossroads before breaking through $4,100

Current Position of the Gold Market

Gold spot(XAU/USD) is maintaining a price around $4,080 per ounce in the Asian market on Friday, moving within a narrow range of $4,020 to $4,100, which is the weekly fluctuation range. Market participants are showing cautious attitudes on both the buy and sell sides as no clear direction emerges.

Federal Reserve Policy Shift Pressures Gold Prices

With the release of the delayed September employment data(NFP), market expectations have shifted. The report shows an increase of 119,000 new jobs and a 3.8% rise in average hourly wages year-over-year, exceeding expectations. This signals that the economy remains resilient, leading to a significant reduction in market expectations for an additional rate cut in December.

Indeed, the CME FedWatch index shows the probability of a rate cut has fallen to around 35%, down more than half from the early 60% expectations just a few weeks ago. The dollar continues to strengthen at its highest levels since May, while gold, as a non-yielding asset, faces structural downside pressure.

Risk Factors Supporting Gold’s Safe-Haven Demand

However, concerns about economic slowdown still linger in the market. The longest-ever federal government shutdown has created a prolonged gap in economic indicators, and there is still insufficient data to accurately assess the current state of the U.S. economy. Mixed signals from employment, inflation, and consumption indicators increase uncertainty.

Adding to this, new variables have emerged with progress in peace negotiations with Ukraine. Ukrainian President Zelensky has announced negotiations with U.S. President Trump, and a U.S.-led peace plan with 28 points is being discussed. However, negotiations on territorial and military concessions suggest that geopolitical risks are unlikely to be resolved in the short term.

Technical Analysis: $4,020 as the First Defense Line

On the 4-hour chart, gold is barely holding above the upward trendline that has been maintained for nearly a month. This trendline coincides with the $4,020 level and also aligns with the 200-period exponential moving average(EMA). This zone is the first key point to determine where the short-term correction might stop.

If the $4,020 support level is clearly broken on a closing basis, the next defense line will be the psychological level of $4,000. Falling below this level, the next supports are the $3,931 and the $3,886 lows formed at the end of October, which serve as consecutive support levels. A decline to this level could deepen the correction.

On the upside, the $4,100 level remains the most notable resistance zone. Despite several recent attempts, prices have failed to sustain above this level, and the market perceives it as a clear resistance area. To break through $4,100, a series of sustained bullish candles rather than just one or two upward moves are required.

The upward targets include the $4,152–$4,155 range and the round figure of $4,200. The $4,152 range is expected to have short-term sell orders and serves as a test to confirm whether the $4,100 resistance has truly turned into support.

Market Focus

Currently, two opposing forces are influencing gold prices. One is the Fed’s hawkish policy stance and the resulting dollar strength, and the other is signals of economic slowdown and safe-haven demand driven by geopolitical risks. The future outlook will largely depend on which of these forces gains the upper hand within the range of $4,020 to $4,100.

Key indicators to watch include the S&P Global manufacturing and services PMI, the University of Michigan Consumer Sentiment Index, and statements from major Fed officials. If these data reaffirm signals of “growth slowdown vs. persistent inflation and wages,” the uncertainty regarding the rate cut path could increase, leading to higher volatility for both the dollar and gold.