Gold (XAU/USD) regained bullish traction on Friday, erasing early losses and advancing over 0.10% as traders digested fresh US inflation data. The yellow metal rose to around $4,127, recovering from intraday lows near $4,043, as softer-than-expected Consumer Price Index (CPI) figures reinforced expectations that the Federal Reserve could initiate rate cuts as soon as next week.
The September CPI report showed annual inflation rising 3.0%, slightly below market forecasts of 3.1%. Core inflation, which excludes volatile food and energy prices, also increased by 3.0% year-over-year, marking a modest cooldown from the previous month. The data aligned closely with analysts’ expectations but failed to bolster the case for further Fed tightening.
Market Outlook: Dovish Fed Expectations Underpin Gold’s Rally
According to the Prime Market Terminal’s interest rate probability tool, markets now assign a 96% chance of a rate cut at the October 28–29 FOMC meeting. This dovish sentiment has helped buoy gold prices, with investors betting that easing monetary policy will weigh on the US dollar and real yields—both traditionally bearish drivers for gold.
Meanwhile, mixed US macroeconomic indicators painted a complex picture of the broader economy. S&P Global’s flash PMI data showed business activity accelerating at the fastest pace since early 2025, with manufacturing and services PMIs rising to 52.2 and 55.2 respectively. However, consumer sentiment weakened, as the University of Michigan’s confidence index was revised downward to 53.6, signaling persistent caution among households.
Geopolitical Backdrop: Safe-Haven Demand Stays Alive
Beyond macroeconomic cues, geopolitics remains a critical tailwind for bullion. The White House confirmed that President Donald Trump will meet with Chinese President Xi Jinping next week in South Korea, just days before the November 1 tariff deadline—a development likely to inject fresh volatility into global markets.
At the same time, escalating tensions surrounding Russia’s oil sector sanctions have rekindled safe-haven demand. The US administration’s recent penalties targeting Lukoil and Rosneft added another layer of uncertainty, keeping gold attractive amid rising geopolitical risk.
Year-to-date, gold has surged nearly 55%, supported by central bank purchases, robust investment demand, and heightened geopolitical concerns.
Technical Analysis: Bulls Target $4,200 After Reclaiming Key Level
From a technical standpoint, XAU/USD has successfully reclaimed the $4,100 handle after briefly dipping below the 20-day Simple Moving Average (SMA) at $4,056. Despite intraday volatility, the uptrend remains intact, suggesting continued buyer interest at lower levels.
The Relative Strength Index (RSI) still points to bullish momentum, indicating room for further gains if buyers can overcome immediate resistance barriers.
- Resistance levels: $4,161 (October 22 high), followed by $4,200, $4,250, $4,300, and the all-time peak near $4,380.
- Support levels: $4,100, then $4,059 (October 8 high), with deeper support at $4,004 (October 22 low).
A sustained move above $4,161 could open the door toward $4,200, while a daily close below $4,100 may signal a short-term correction toward the $4,050 region.
Outlook:
With markets pricing in a high probability of a Fed rate cut and geopolitical tensions still brewing, gold’s bullish bias appears well-supported heading into the final week of October. If dovish expectations materialize, XAU/USD could extend gains toward the $4,200–$4,300 zone in the near term, reaffirming its position as one of 2025’s standout assets in the commodities market.
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