On Monday, October 12, gold fell sharply after reaching a weekly high. XAU/USD traveled from $4,217 to $4,163, losing about 1.49% for the day. By Tuesday morning, the metal bounced from the $4,150 area and again approached $4,200.
Gold remains within the range
Over the past two weeks, XAU/USD has mostly traded in the $4,150-4,218 corridor. The attempt to consolidate above the upper boundary failed again. After updating the weekly high, sellers quickly pushed the price back below $4,200.
Oil became the main trigger
WTI gained more than 2% and rose to $93.69 per barrel. The rise occurred amid new geopolitical risks and threats to supplies through the Strait of Hormuz. Expensive oil intensifies inflation concerns. This increases the likelihood that US rates will remain high for longer.
The dollar is also pressuring the metal
The DXY dollar index rose by about 0.3%, to 102.56. This is one of the highest levels since April 2025. A strong dollar usually creates pressure on gold, since the metal is denominated in the American currency.
Yields remain high
The yield on 10-year US Treasuries is holding around 5.242%. For gold, this is an additional negative factor. The metal does not generate interest income, so against the backdrop of high bond yields, part of the capital flows into interest-bearing instruments.
What the market expects from the Fed
The minutes of the last meeting allow for another rate hike of 0.25 percentage points by the end of 2026. The market estimates the probability of a hike in December at almost 90%. At the October meeting, the probability of a step up remains significantly lower, around 20%. This keeps pressure on gold through the dollar and the debt market.
What Fed officials say
The rhetoric of individual regulator representatives remains hawkish. The main argument is that inflation is still spreading to new categories and requires caution. While this backdrop persists, sustained gold growth will depend not only on geopolitics, but also on new inflation data.
What's next
US CPI will be released on Wednesday. On Thursday, the market will receive the producer price index. On Friday, a new speech by a Fed representative is expected. These events could noticeably change rate expectations and, accordingly, gold's movement.
Where the nearest levels are
On the downside, $4,150 remains an important zone. The next support is around $4,100. On the upside, the first resistance is $4,200. Above is the $4,256 area, where the 100-day moving average passes.
Did you catch this gold sell-off on your deposit?
A move of almost $55 per ounce in a single session shows how quickly gold reacts to oil, the dollar, and rate expectations. In prop trading, a trader passes a challenge, gains access to the company's trading account, and works within pre-established risk limits It is better to understand the mechanics in advance, before new inflation data is released.