Fundamental analysis of gold

Gold held near $4,400 per ounce, after gaining around 1% on Wednesday, as some of the pressures that weighed on the precious metal in recent sessions eased.

The main support for gold currently comes from declining expectations of a US interest rate hike. New York Federal Reserve President John Williams indicated that there is evidence inflation continues to ease as the impact of tariffs fades. Meanwhile, labor market data showed that US companies added jobs at a more moderate pace in August, partially reducing expectations for a more hawkish monetary policy stance.

At the same time, a weaker US dollar supported gold prices, as a softer dollar makes the precious metal less expensive for investors holding other currencies.

On the geopolitical front, concerns over a prolonged escalation have eased, helping limit the rise in energy prices and reducing fears of renewed inflationary pressures. This remains important for gold, as higher inflation could encourage the Federal Reserve to keep interest rates elevated or potentially raise them again.

Meanwhile, central bank demand for gold and reserve diversification remain important longer-term factors. The Dutch central bank’s decision to relocate part of its gold reserves from New York to London amid heightened geopolitical uncertainty has once again highlighted gold’s importance as a strategic reserve asset.

Looking ahead, gold’s performance is likely to remain primarily influenced by US labor market and inflation data, interest rate expectations, movements in the U.S. dollar and Treasury yields, as well as developments in geopolitical tensions.

Technical analysis of gold

Figure: XAUUSD, H4, TradingViewFigure: XAUUSD, H4, TradingView

From a technical perspective, gold continues to trade within an overall downtrend on the four-hour chart, forming lower highs and lower lows.

According to technical analysts, the recent rebound in prices can be viewed as a corrective move within the broader downtrend, with gold approaching an important supply zone that coincides with key Fibonacci levels. This could increase the likelihood of renewed selling pressure, potentially targeting $4,321.431.

Meanwhile, $4,464.140 represents a key level for gold on the four-hour chart, as it marks the last lower high within the current bearish structure. As long as prices remain below this level and fail to establish a higher high, the bearish scenario outlined above remains valid.

However, a break above $4,464.140, followed by the formation of a higher high, could signal a shift in market structure from bearish to bullish, potentially opening the door for further upside over the short to medium term.