The yellow metal is stuck in a defensive posture. Spot gold closed Friday at $4,140, down 0.86% on the day but bleeding 3.36% for the week. The drop follows a sharp 4% plunge on September 28, driven by a surging US dollar and climbing bond yields. As of Monday night, the metal is hovering around $4,130, roughly 0.2% lower, struggling to break above the $4,150 resistance level.
Praveen Singh, Head of Currencies and Commodities at Mirae Asset ShareKhan, notes that gold remains under pressure unless yields fall. The metal’s attempts to recover throughout the week were short-lived, repeatedly pushed back by high oil prices and a firmer dollar. Singh points out that the only factor keeping the metal from breaking the $4,100 support is the easing probability of a Fed rate hike in October.
The US data dump this week was mixed but ultimately failed to lift sentiment. The September nonfarm payroll report showed a mere 29,000 jobs added, well below the 90,000 forecast. August figures were revised down to 133,000, and the unemployment rate ticked up to 4.2%, the highest since June. While the soft data typically boosts gold, the impact was muted because the shrinking workforce means even low job growth doesn't signal immediate economic collapse. Yields did not drop significantly, depriving gold of a safe-haven rally.
Geopolitical tensions are adding fuel to the fire, but in a complex way. Iran’s attacks on tankers in the Strait of Hormuz have escalated, with seven incidents reported since September 28. Saudi Aramco’s CEO has warned that global crude stockpiles are thinning, potentially taking two years to replenish. Aramco has already cut the price of Arab Light to Asian buyers by $5 a barrel, a six-year low, as the G7 plans to release 100 million barrels of oil and diesel over four months to stabilize prices.
The situation is tricky for traders. Higher oil prices from geopolitical risk usually boost inflation expectations, which can be good for gold. However, the current dynamic is that the stronger dollar and higher yields are outweighing the inflation hedge. Unless the Fed signals a clear pivot or geopolitical risks spike enough to cause a global equity sell-off, gold is likely to remain range-bound between $4,100 and $4,150 in the near term.