$3,886 floor gives way: Gold hits new YTD low as Fed hawks hold firm

Over 3.3% lost as Gold slumps to a new yearly low of $3,880.
Below $3,886, the breakdown confirms selling pressure and leaves further downside risks.
December rate hike probability drops to 70% even as Fed officials support further tightening.

$3,880 marked a fresh year-to-date (YTD) low for Gold (XAU/USD) on Friday. The sell-off took prices below $3,900 for the first time since October last year. Modest gains in the US Dollar and US Treasury yields, weaker risk appetite and hawkish Fed comments drove the decline. XAU/USD is trading at $3,884, a loss of more than 3.3%.

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XAU/USD breakdown deepens as hawkish Fed comments and elevated Oil prices weigh

A break below the key $3,886 support level from 28 October 2025 points to further losses for bullion. Of three Federal Reserve (Fed) officials, two advocated more tightening. All three favoured a gradual approach.

Two further rate hikes were proposed by Dallas Fed President Lorie Logan. St. Louis Fed President Alberto Musalem urged another hike soon, arguing that policy is still too loose.

A gradual approach also has the backing of Richmond Fed President Thomas Barkin, although he acknowledged that inflationary pressure is spreading.

The US Dollar nevertheless made no headway against this backdrop, and US Treasury yields moved slightly lower.

At 3.4% YoY, US economic growth in Q3 comfortably exceeded forecasts. Core PCE inflation stayed elevated at 3.1% YoY, above September’s reading but matching estimates. The figures could make a Fed rate hike more likely. Investors, however, have cut the probability to 70% from around 84% on Wednesday after the Fed’s decision, according to the CME FedWatch Tool.

Higher energy prices are adding to bullion’s headwinds. Talks between the US and Iran remain ongoing, according to Axios, but the US Oil benchmark, West Texas Intermediate (WTI), has gained 0.5% to trade near $102 per barrel.

A busy US economic calendar awaits next week, with October’s ISM Manufacturing and Services PMIs and a series of employment releases in focus. JOLTS, the ADP Employment Change and Initial Jobless Claims precede the week’s main labour-market release, Nonfarm Payrolls.

$3,900 breached: XAU/USD technical outlook signals more Gold weakness

Below $3,900, Gold’s broader trend remains bearish, leaving a 12-month low within reach. The Relative Strength Index (RSI) shows negative momentum approaching oversold territory, indicating that the downtrend is gaining strength.

A daily close for XAU/USD beneath $3,886, the low recorded on 28 October 2025, would put $3,800 next in focus. A break through that level would expose $3,500, where the swing high of 22 April 2025 has become support.

To reverse the bearish trend, buyers need to reclaim $3,900 and then $4,000. That would open a path towards $4,100, followed by the 100-day Simple Moving Average (SMA) at $4,213.

Gold: key questions answered

What attracts investors to Gold?

As both a store of value and a medium of exchange, Gold has held an important place throughout human history. Beyond its lustre and use in jewellery, the precious metal is now widely regarded as a safe-haven asset, or a sound investment in periods of turbulence. Its independence from any particular issuer or government also underpins its widespread use as a hedge against inflation and currency depreciation.

Which buyers hold the most Gold?

1,136 tonnes of Gold, worth around $70 billion, were added to central bank reserves in 2022, according to the World Gold Council. That was the largest annual purchase since records began. Central banks are the biggest holders of Gold. To support their currencies during turbulent periods, they typically diversify reserves and purchase Gold to strengthen perceptions of their economies and currencies. Substantial Gold reserves can bolster confidence in a country’s solvency. Emerging-economy central banks, including those in China, India and Turkey, are rapidly expanding their Gold reserves.

How does Gold move relative to other assets?

An inverse relationship links Gold with the US Dollar and US Treasuries, both major reserve and safe-haven assets. A weaker Dollar typically supports Gold, helping investors and central banks diversify their holdings during turbulent periods. Risk assets also tend to move in the opposite direction to Gold: equity rallies generally weigh on the metal, whereas selling in riskier markets usually supports it.

Which factors drive Gold prices?

Many factors can shift Gold prices. Its safe-haven appeal means geopolitical instability or concerns over a severe recession can trigger rapid gains. Since Gold pays no yield, lower interest rates tend to support it, while higher borrowing costs generally weigh on the metal. Most price movements nevertheless hinge on the US Dollar (USD), as Gold is quoted in dollars (XAU/USD). Dollar strength tends to restrain Gold prices; a weaker Dollar is more likely to lift them.