Gold (XAU/USD) was steady on Thursday, up 0.54% at about $4,79, as a firmer US Dollar and high US Treasury yields restrained follow-through after an early rebound. The Dollar Index (DXY) held near 101.75 after reaching 101.99, while the 10-year yield slipped to around 5.28% after touching 5.34%, its highest since 2002; higher yields raise the opportunity cost of holding non-yielding gold and a stronger dollar lifts its price for non-dollar buyers. US labour data remained firm: Initial Jobless Claims came in at 197K versus 200K expected and 198K previously, while the four-week average eased to 200K from 202.5K. ADP showed private payrolls rising 90K in September against a 70K forecast, following 36K in August.
Rate expectations shifted after softer inflation and stronger growth signals. Core PCE increased 0.2% MoM versus a 0.3% forecast, and held at 3.0% YoY against expectations for 3.3%, pushing the implied probability of an October 27–28 Fed hike to about 37% from 70% earlier in the week, according to CME FedWatch. Separately, Q2 annualised GDP was revised up to 2.2% from a 1.5% forecast, while stalled US-Iran talks on the Strait of Hormuz kept oil prices elevated, sustaining inflation risk. Technically, XAU/USD stayed below the 20-day Bollinger SMA at $4,301, with resistance also near $4,471 and $4,700; RSI sat around 40, MACD remained negative and ADX was near 19, with support marked at $4,131, $4,100 and $4,000.
Gold’s Struggle Amid Strong US Dollar and Yields
We are currently watching gold struggle around the $4,179 level as a robust US dollar and elevated 10-year Treasury yields at 5.28% cap its upward potential. Historically, when the 10-year yield climbs near these multi-decade highs, the opportunity cost of holding non-yielding metals rises, dampening bullish sentiment. We suggest derivative traders remain cautious, as the US Dollar Index pushing toward 102 continues to exert heavy downward pressure on precious metals.
Despite strong labor data, including weekly jobless claims falling to 197,000, cooling inflation has shifted the market’s view on upcoming interest rates. We note that the probability of an interest rate hike at the late October meeting has plunged to 37% from 70% earlier this week. This sudden shift provides a temporary cushion for gold, meaning we could see sharp price swings as traders digest the upcoming manufacturing and payroll data.
Technical Overview and Trading Strategy
From a technical perspective, we see that the metal is trading well below its 20-day moving average of $4,301, with momentum indicators pointing to a bearish bias. Derivative traders should monitor the immediate support floor near $4,130, where short-term buying interest might temporarily emerge. If this key level fails to hold, we expect a deeper decline toward the psychologically important $4,000 mark.
We recommend utilizing limited-risk options strategies or tight stop-losses on short-term sell positions to manage risk during this highly volatile period. Hedging strategies may also be useful as we await the upcoming Nonfarm Payrolls report, which historically triggers sharp market movements. For now, we favor selling into brief rallies unless the price can make a sustained break back above the $4,301 resistance level.
