Gold slips below $3,950 as dollar gains on Fed rate-hike expectations and Middle East tensions

Gold (XAU/USD) dropped below $3,950 during the first half of Thursday's European session, extending a three-day decline. The move came as the U.S. dollar continued to rise on expectations that the Federal Reserve will raise rates again in December, following the October consumer price index report and recent hawkish comments from Fed officials. Analysts at Rabobank said the market is now fully priced for a December hike and noted that political pressure on the Fed appears to have eased after the recent U.S. midterm elections.

Geopolitical tensions also supported the dollar. The United States and Iran have exchanged strikes in the Strait of Hormuz, and Iranian Deputy Chief of Staff Brigadier General Kioumars Heidari said Tehran will keep the waterway closed unless ordered otherwise by the country's leader. The dollar index reached its highest level since April 2025, reinforcing downward pressure on gold.

Traders will watch upcoming U.S. weekly jobless claims data and further Fed speeches for clues on the dollar’s direction. Technical analysis shows gold trading below key Fibonacci levels, with immediate support near $3,976 and resistance around $4,009. While the MACD indicator turned slightly positive, the RSI remains near oversold levels, suggesting limited upside potential in the near term.