Gold climbs back above $4,000 on hopes of easing US‑Iran tensions

• At close to $4,010, Gold has regained some ground in early Asian trading on Tuesday.
• Prospects of reduced US-Iran hostilities lend Gold a measure of support.
• Wednesday’s October Fed meeting is likely to leave interest rates unchanged.

Around $4,010 marks the recovery in Gold price (XAU/USD) during Tuesday’s early Asian session, ending a two-day run of losses. Ahead of this week’s US Federal Reserve (Fed) meeting, softer oil prices are easing inflation worries and allowing the precious metal to edge upwards.

Expectations that hostilities between the US and Iran could ease have sent oil prices sharply lower. According to CNBC, Saudi Arabia’s Defence Minister met Iranian leaders in Tehran on Monday to try to defuse simmering tensions between the two countries. Inflation concerns have eased somewhat as a result, although that relief may be short-lived.

Bob Haberkorn, senior market strategist at StoneX, said: “There’s been a bit of a pullback in crude oil, which is helping gold, while some bargain-hunting is also coming in,” adding: “I think it’s going to be light trading here and we’re going to hang around the $4,000 level into the Fed announcement to see what they have to say,”

Wednesday’s Fed interest rate decision will be the main focus for markets. Following September’s increase, the US central bank is widely expected to keep rates within the 3.75% to 4.00% range at the forthcoming October meeting.

According to the CME FedWatch tool, market pricing currently puts the likelihood of another quarter-point Fed rate rise on Wednesday at around 10%. At least one increase before year-end is expected by nearly 82.3%.

Gold’s bullish case faces a test as CTAs turn short near $4,000

TD Securities says “the long-term gold bull thesis faces a test near the $4,000/oz level, with CTAs now short across all signals.” As prices test this important threshold, positioning is tilted towards the downside: the bank observes that “CTAs have already been heavy sellers in gold, with systematic funds firing short across all momentum indicators,”

Even so, TD Securities observes that “spot and futures pricing has traded below the key $4,000/oz level, however the market has again shown signs of being extremely resilient with prices recovering in fairly short order.” The bank also notes that “despite the near-term easing of ETF flows, the trend remains supportive, while central bank demand has been a key upside driver, particularly when prices are within this territory.”

On positioning, TD Securities says “CTAs would start to cover shorts north of $4,092/oz,” implying that a sustained break above this threshold could prompt short-covering. Such activity could further strengthen what remains a broadly supportive backdrop for gold.

Warsh highlights investment and AI while leaving Fed policy options open

A score of 5.6/10 on the FXS Speechtracker places Fed Chair Warsh’s speech slightly below the historical average of 6.1/10. Although the messaging was broadly unchanged, the reading indicates a somewhat less impactful tone than the established baseline. Warsh’s admission of being “over-scarred from the global financial crisis” signals caution, despite his emphasis on structural growth and a surge in investment stemming from “good policies,”. He declined to prejudge the forthcoming October and December meetings, while underlining the spillovers between US policy and the rest of the world. His focus on AI as both a near-term driver of demand and a means of improving confidence in data, together with attention to financial stability and tail risks, points to a risk-aware approach. This favours continued policy vigilance rather than an immediate change in the Fed’s reaction function.

With a movement of 0.00 points, the FXS Fed Sentiment Index held at 127.51, indicating that perceptions of the policy stance remained firmly hawkish after the speech. Taken together, the unchanged, elevated index and the slightly lower FXS Speechtracker score suggest that markets perceived no significant adjustment to the Fed’s hawkish bias. Warsh’s caution and emphasis on investment and AI were interpreted as compatible with a continued preference for tight conditions.

Technical Analysis: Gold’s outlook remains negative below the 100-day SMA

On the daily chart, spot prices remain comfortably above both the 100-day simple moving average (SMA) and the middle band of the 20-day Bollinger Bands. This leaves the near-term outlook for XAU/USD bullish and the wider uptrend undisturbed by the latest consolidation. Trading above the lower Bollinger band also suggests a cushion against declines. Meanwhile, the Relative Strength Index (RSI), at 35.20, is edging towards oversold territory, suggesting that selling pressure could be fading rather than pointing to a reversal in the trend.

The lower Bollinger band at $4,020 provides the immediate downside support, followed by the Bollinger midline around $4,130 and the 100-day SMA at $4,220. Together, these form a concentrated demand zone supporting the bullish structure. The current indicators identify no nearby resistance, so a recovery from this support zone could encourage buyers to seek renewed control and a move towards recent highs, provided daily closes stay above the technical floor of $4,020.

(The technical analysis of this story was written with the help of an AI tool. Know more.)