Gold Rebounds, but Risks Remain: Geopolitics vs. the Fed in Focus

Gold prices attempted to recover on Wednesday (September 9) after previously falling to around the US$4,340–US$4,350 per troy ounce area, their lowest level in about a week. XAU/USD later rebounded toward the US$4,400 region, supported by a weaker U.S. dollar hovering near a two-week low. Strength in the Japanese yen amid expectations of a potential Bank of Japan rate hike also pressured the greenback, giving gold more room to recover.

From a fundamental perspective, escalating geopolitical tensions in the Middle East remain one of the main supportive factors for gold. Growing concerns over disruptions to regional energy supplies have pushed Brent crude closer to US$100 per barrel, increasing demand for traditional safe-haven assets. However, higher oil prices also pose renewed inflation risks, meaning the geopolitical impact on gold is not entirely bullish.

The biggest headwind for gold remains the outlook for Federal Reserve monetary policy. Rising energy prices could keep U.S. inflation elevated, while recent labor market data have continued to suggest relatively resilient economic conditions. Expectations that the Fed could maintain a hawkish stance increase the opportunity cost of holding non-yielding assets such as gold and could limit the scale of its recovery.

Investor attention is now shifting toward upcoming U.S. inflation data, particularly the Producer Price Index (PPI) and Consumer Price Index (CPI). Softer inflation readings could weaken expectations for tighter Fed policy, potentially pushing the U.S. dollar and Treasury yields lower and providing fresh upside momentum for gold. In contrast, hotter-than-expected inflation, particularly if driven by surging energy costs, could strengthen the case for a more hawkish Fed and put renewed pressure on bullion.

From a technical perspective, gold is currently showing a neutral-to-recovery bias, although a full bullish reversal has yet to be confirmed. Price action remains above the key US$4,340–US$4,350 support zone, while momentum indicators suggest that buyers and sellers remain relatively balanced. The latest rebound indicates that bargain hunting is emerging, but stronger confirmation is still needed before buyers regain full control.

On the upside, the US$4,400–US$4,420 zone serves as the first resistance area that gold needs to decisively break to strengthen its recovery momentum. The next important resistance is located around US$4,460. A sustained breakout above this area could pave the way for a move toward US$4,500 and US$4,535. Conversely, failure to remain above US$4,400 could bring gold back toward the US$4,350–US$4,340 support zone. A break below this area could expose the market to further declines toward US$4,300 and US$4,260.

Overall, gold's outlook today remains caught between safe-haven demand and concerns over higher-for-longer U.S. interest rates. A weaker dollar and escalating Middle East tensions continue to provide support for XAU/USD, but surging oil prices and renewed inflation risks could prevent investors from aggressively chasing the metal higher. As long as gold remains above US$4,340–US$4,350, the recovery scenario remains intact, while a stronger bullish signal would emerge if prices reclaim the US$4,460 area.

Today's bias: Neutral to moderately bullish. Market attention will remain focused on geopolitical developments, the U.S. dollar, Treasury yields, oil prices, and U.S. inflation data ahead of the Federal Reserve's next policy decision.(mrv)

Source : Newsmaker.id