Gold again tests key $4,300 support amid rate hike bets and oil surge

FUNDAMENTAL OVERVIEW

Gold climbed on Friday even though the monthly core inflation figure came in above forecasts. That response seemed unusual, since the data strengthened the case for a Federal Reserve rate increase, with market participants now assigning an 87% probability of a hike at the upcoming Wednesday meeting.

In addition, the upward shift in expectations driven by climbing oil prices lifted real yields, a factor that typically weighs on the yellow metal. Despite this, gold has held relatively steady above the key $4,300 support level.

Attention turns to the Federal Open Market Committee decision on Wednesday, where a 25-basis-point rate increase is anticipated. Such a move would represent the first rate hike since 2023. Market participants will watch for any unexpectedly hawkish signals, which could push gold down as financial conditions tighten further.

Another key factor is the situation in the Middle East, where persistent oil price gains are stoking inflation worries amid escalating disruptions and supply anxieties. Oil has been a primary market mover of late; therefore, any reduction in tensions could cause prices to fall and prompt a reassessment of aggressive rate hike bets, benefiting gold.

At present, the fundamental backdrop suggests additional declines for gold, absent a de-escalation in the Middle East or a dovish tilt from the Federal Reserve.

GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME

From a daily perspective, gold is once again testing support at 4,311. Buyers may step in at this level, placing risk below it in anticipation of a move toward 4,890. Sellers, meanwhile, are looking for a break below to target a decline to 3,885.

GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

On the four-hour timeframe, a downward trendline marks the bearish structure. A pullback to that line could attract sellers, who would place risk above it and continue pressing for lower levels. Buyers would aim for a break above the trendline to add to bullish positions targeting 4,890.

GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

On the hourly chart, the situation is clear: buyers may accumulate near support aiming for fresh highs, while sellers seek a breakdown to strengthen the bearish case.

UPCOMING CATALYSTS

The FOMC rate decision arrives on Wednesday, while US jobless claims data follows on Thursday. Market participants will also monitor Middle East developments closely.