On Tuesday, October 6, XAU/USD fell to $4,100. This is the lowest level in about two months. From the recent peak around $4,696, gold has lost about 12%. The main pressure factor remains the strong dollar.
Where the key levels are now
The nearest support is around $4,098. This level coincides with the Fibonacci correction zone from the previous upward impulse. If it does not hold, the next important reference point becomes the area around $3,936, where the low of the previous cycle is located. On the upside, the nearest resistance runs around $4,226. Even higher is the 100-period moving average on the 4-hour chart around $4,254.
What the technical picture shows
RSI is at approximately 38. This indicates weak momentum, but gold has not yet reached the classic oversold zone. MACD remains below the zero mark, which also points to continued pressure from sellers.
Why the dollar is pressuring gold
The dollar is holding near its highs since April 2025. At the same time, US Treasury yields remain at multi-year peaks. For gold, this is a negative factor. The metal does not generate coupon or dividend income, so with high rates and bond yields, it becomes more expensive for investors to hold a position in gold instead of yield-bearing dollar assets.
What the market expects from the Fed
The market continues to price in further tightening of Fed policy. Currently, about 86 basis points of rate hikes are priced in over a 12-month horizon. At the beginning of last week, the market was pricing in about 100 basis points. The probability of at least one rate hike by the end of the year remains above 85%. Some banks also expect several additional rate hikes in the coming quarters.
Geopolitics is not helping gold for now
Tensions along the Iran-Israel and Yemen-Saudi Arabia lines persist. Usually such events support demand for safe-haven assets. But right now, the effect of the strong dollar and high yields has proven stronger than geopolitical demand for gold.
What's next
The nearest important trigger is the Fed meeting minutes on Wednesday. The market will be watching how unanimous regulator officials are on the issue of further policy tightening. For gold, the key levels remain $4,098 on the downside and $4,226-4,254 on the upside.
Do you trade gold on days like these?
A decline of about 12% from the peak means that XAU/USD is capable of moving tens of dollars in a single session. In such conditions, risk management rules are especially important. Different prop firms differ noticeably in daily drawdown, allowable gold volume, and rules for holding positions overnight. These conditions are better checked before buying a challenge, rather than during a strong market move.