Gold Holds Below $4,050 as Dollar Gains on Fed Rate Decision and Geopolitical Tensions

Gold (XAU/USD) edged higher from its daily low but remained in a bearish intraday range below $4,050 in the early European session on Thursday. The U.S. dollar attracted fresh buying after the Federal Reserve left interest rates unchanged at its October meeting, a move that supported the greenback and weighed on the non-yielding metal.

The Fed’s decision was widely anticipated, with a 10-2 vote to hold rates steady and two officials, Governor Lisa Cook and Cleveland Fed President Beth Hammack, favoring a quarter-point hike. At the post-meeting press conference, Fed Chair Kevin Warsh said the central bank stays vigilant against persistent inflation and geopolitical risks, underscoring expectations of a possible rate increase in December. CME Group’s FedWatch Tool shows traders assigning roughly an 80% probability to a rate hike at the December meeting, a outlook that has bolstered demand for the dollar and shifted flows away from gold.

Geopolitical developments in the Middle East also supported the dollar. The Wall Street Journal reported that U.S. officials have advised several Gulf Arab countries to prepare for a short, intense military campaign against Iran following the November 3 midterm elections. Iranian Foreign Minister Abbas Araghchi said the armed forces are ready to defend the country while remaining in contact with intermediaries for diplomatic options. Regional mediators led by Qatar are working to restart U.S.–Iran negotiations, and U.S. Vice President JD Vance reportedly sent a letter to Iran’s Supreme National Security Council secretary Mohsen Rezaei to revive peace talks.

Fighting between the Iran-backed Houthi group and the Saudi-backed Yemeni government continued, with the Houthis claiming a ballistic-missile strike on Saudi Arabia’s Ras Tanura oil refinery and earlier attacks on pumping stations along the East-West oil pipeline. These incidents have raised concerns about oil supply disruptions and supported higher crude prices, which in turn have favored the dollar and kept pressure on gold.

Traders are awaiting key U.S. macro data, including the advance Q3 GDP report and the Personal Consumption Expenditures (PCE) price index, before taking larger positions. Technical analysis shows the XAU/USD pair trending lower within a descending channel, staying below the 100-period exponential moving average on the 4-hour chart. While momentum indicators hint at a possible corrective bounce, resistance is expected near $4,105 and $4,125, with the $4,000 level identified as a potential support point.

"The central bank remains vigilant against persistent inflation and geopolitical risks," Fed Chair Kevin Warsh said at the post-meeting press conference.

"Iranian armed forces stand ready to defend the country while keeping diplomatic channels open," Iranian Foreign Minister Abbas Araghchi said.

"U.S. officials have advised Gulf Arab countries to prepare for a short, intense military campaign against Iran," the Wall Street Journal reported.