Gold Holds Above $4,000 Amid Mixed Economic Data and Geopolitical Risks

Gold (XAU/USD) recovered from a three-month low and remained above the $4,000 psychological threshold during the first half of Monday’s European session. The metal ended a two-day decline but lacked strong buying momentum amid a backdrop of mixed economic signals.

US manufacturing activity surged, with the flash PMI rising to 56 in October, the highest in 53 months and above expectations. The services PMI matched forecasts at 57.9, while the composite output index slipped to 57.6 from a five-year peak. An increase in the output price index to 59.8, the strongest since August 2022, suggests persistent inflation pressures, supporting expectations of further Federal Reserve tightening.

Oil prices climbed to their highest level since mid-September after supply concerns linked to attacks in Saudi Arabia and heightened tensions involving Iran. The Iran-backed Houthis pledged continued attacks on Saudi targets, and stalled US-Iran talks kept geopolitical risk premiums elevated, reinforcing demand for the US dollar and limiting gold’s upside.

Traders are awaiting the Federal Open Market Committee’s two-day meeting, with particular focus on the post-meeting statement and comments from Fed Chair Kevin Warsh for clues on future policy. Additional central-bank meetings this week, including those of the Reserve Bank of New Zealand, the European Central Bank and the Bank of Japan, could add volatility to gold prices.

Technical analysis indicates a bearish near-term tone, with the metal failing to break above the 100-period exponential moving average near $4,100. A sustained move above this level would be needed for a shift toward a more constructive outlook and potential gains toward $4,200.