Gold News: Softer Dollar Fails as December Rate Risk Caps XAUUSD

Gold Could Not Turn a Softer Dollar Into a Breakout

Gold had the dollar working in its favor Friday, but it did not have enough rate relief to turn the move into a rally. The greenback slipped as traders backed away from an October hike after Federal Reserve Chair Kevin Warsh declined to signal his next move. Gold buyers showed up early, then stopped at the first real test.

The problem has not changed. October may be coming out of the rate trade, but December is not. Hot CPI and PPI reports are still sitting behind the market, and traders are still pricing a strong chance of another increase before year-end.

That left gold caught between a softer dollar and a Federal Reserve that has not finished with inflation. The metal held its recent lows, but the Friday bounce did not take out the offers needed to change the chart.

On Friday, Spot Gold (XAUUSD) settled at $4,165.42, down $5.275 or -0.13%. December Comex Gold futures finished at $4,181.10, up $11.00 or +0.26%.

Daily Spot Gold (XAUUSD) Technical Analysis

Spot Gold fell late in the session on Friday after the buying dried up at $4,199.08 earlier in the session. The main trend is down according to the daily swing chart. A trade through the swing top at $4,217.40 will change the main trend to up. A move through the secondary higher bottom at $4,073.55 will reaffirm the downtrend and likely lead to a test of the main bottom at $4,066.54. Taking out $4,066.54 will signal a resumption of the downtrend.

A 50% support cluster at $4,145.48 to $4,141.97 appears to be the key factor controlling the near-term direction. If it fails, sellers are likely to press the market into the two main bottoms. If buyers can sustain the move over this area, then they could take a shot at $4,217.40 and possibly turn the main trend higher.

I don’t see a quick breakout developing after a change in trend to up because of a resistance cluster at $4,217.40 to $4,233.10. Overtaking this could create some upside volatility with potential targets at a 61.8% level at $4,272.41, an intermediate 50% level at $4,319.60 and the 50-day moving average at $4,331.35.

Although the main trend is down and the market is below the 50-day moving average, the formation of the two bottoms at $4,073.55 and $4,066.54 suggests there may be some passive bidding defending against a washout to the downside. However, until buyers start aggressively taking out offers, the market could continue to build a support base.

Daily December Comex Gold Futures Technical Analysis

December Comex gold futures finished higher on Friday, but well below its intraday high at $4220.40. This level fell short of the two main tops at $4242.30 and $4259.00.

The main trend is down according to the daily swing chart. A trade through $4242.30 will change the main trend to up. The move will be reaffirmed if buyers can take out the next swing top at $4259.00.

A trade through $4095.00 will signal a resumption of the downtrend. Taking out the $4091.20 main bottom will reaffirm the downtrend.

The recent price action has been centered on a pair of 50% levels at $4175.10 and $4166.80. Trader reaction to this area is likely to determine the near-term direction. A counter-trend bullish scenario could develop on a sustained move over $4175.10. The bearish trend will be reaffirmed on a sustained move under $4166.80.

The main trend is down, but the formation of the secondary higher bottom at $4095.00 and the recapturing of the two pivots at $4175.10 and $4166.80 suggest a support base may be forming. The bearish pattern is likely to change when traders aggressively take out enough offers to fuel a rally through a swing top instead of selling rallies against them.

December Is Still the Rate Trade

Warsh did not give traders a reason to price another move at the October meeting. FedWatch now shows an 84.5% chance the Fed leaves rates unchanged this month.

That bought gold some time. It did not give the market a clean rate win.

September CPI rose 0.6% for the month and 3.7% from a year earlier. Producer prices rose 6.3% annually, their largest increase since 2022. The market is still pricing a 90% chance of a December rate increase.

That is why the dollar break did not turn into a larger gold rally. The market has less concern about the next Fed meeting, but it has not backed away from the idea that borrowing costs will be higher before year-end.

The Dollar Let Go, but Gold Did Not Run

The Dollar Index fell 0.22% Friday to 101.779 and was headed for its first weekly decline in more than a month. The 10-year Treasury yield finished near 5.08%, while the two-year yield slipped to 4.715%.

Those moves gave gold a better backdrop than it had after the inflation reports earlier in the week. Buyers pushed Spot Gold to $4,199.08 and December futures to $4,220.40. Neither contract could stay there.

That was the Friday trade. The dollar gave up some ground. Yields stopped climbing. Gold bounced, but it did not attract enough new buying to get through the nearby tops.

The split between the two contracts showed the same hesitation. December futures finished higher, while Spot Gold settled slightly lower after the late-session pullback.

What to Watch

The December rate decision remains the problem for gold buyers. A pause in October took pressure out of the immediate trade, but the hot inflation reports and December hike odds are keeping the metal from turning a softer dollar into a sustained rally.

Spot Gold has a support cluster at $4,145.48 to $4,141.97 and two main bottoms below it at $4,073.55 and $4,066.54. The main trend remains down, but Friday’s action showed buyers are still defending the lower part of the range. They need to take out $4,217.40 to change the main trend.

December Comex Gold futures held above their $4,175.10 and $4,166.80 pivots into the close. The $4,242.30 swing top is the next chart decision, with $4,095.00 marking the secondary higher bottom under the market.

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