Gold rebounds modestly from monthly low as dollar sells off

Gold (XAU/USD) rose modestly from the $3,965 area, its lowest point since July 17, as the U.S. dollar continued to weaken. The dollar's decline was driven by a sell-off in Treasury yields, where investors moved into safe-haven government bonds after weak technology earnings raised doubts about the returns from rising AI spending.

The move also reflected renewed optimism for diplomatic progress in the Middle East, with U.S. Vice President JD Vance sending a letter to Iran’s Supreme National Security Council and Qatar offering a new draft deal to end the conflict involving the United States and Israel.

Geopolitical risk remained elevated, however, as fighting between Iran-backed Houthi forces in Yemen and Saudi Arabia persisted, and Iran’s navy reported that four oil tankers had struck sea mines in the Strait of Hormuz, prompting oil prices to reach a multi-month high.

U.S. macroeconomic data released on Thursday showed a resilient economy and persistent inflation, reinforcing expectations of a Federal Reserve rate hike in December. The first estimate of third-quarter GDP indicated an annualised growth rate of 3.4%, up from 2.2%, while the Personal Consumption Expenditures price index rose 0.5% in September and 3.6% year-over-year.

Technical analysis on the 4-hour chart showed gold trading within a downward-sloping parallel channel, below its 100-period exponential moving average, with momentum indicators pointing to continued selling pressure. A break below the recent monthly swing low near $3,975 could open the path to further declines toward the channel’s lower boundary around $3,946, while any rebound would likely face resistance near $4,025-$4,030 and the 100-period EMA around $4,093.