Gold Analysis: Rising Yields and Dollar Strength Weigh on XAU/USD

The trading week continues, and for now gold remains under notable pressure in the short term. This can be seen in the performance of XAU/USD over the last three trading sessions, where the metal has declined by more than 2.00%, bringing a bearish bias back into focus after it had lost momentum in recent weeks. The latest selling pressure has been driven primarily by renewed strength in both the U.S. dollar and the bond market, following increasingly hawkish comments from members of the Federal Reserve. As long as this backdrop remains in place, gold may continue to struggle to regain ground and selling pressure could remain relevant during the sessions ahead.

Is the Fed Still a Problem for Gold?

Over recent sessions, several Federal Reserve officials have delivered comments that have reinforced expectations of a more aggressive central bank stance. First, Susan Collins, President of the Boston Fed, emphasized that higher interest rates remain necessary because inflation continues to run above target and could stay above the 2.00% objective for longer. These remarks were followed by comments from Tom Barkin, President of the Richmond Fed, who stated that inflation risks remain greater than risks to the labor market and left the door open to further rate increases in upcoming meetings.

These comments have gained importance because they continue to strengthen expectations of a higher-rate environment in the United States. This shift is already reflected in market pricing, where the probability of a rate hike at the October 28 meeting has climbed above 70%, compared with 55% just one session earlier. This suggests that investors continue to adjust their expectations toward a more aggressive Federal Reserve.

Source: CMEGROUP

The key point is that these expectations have once again begun influencing markets that often compete with gold for investor attention, particularly the U.S. dollar and Treasury bonds. On one side, 10-year Treasury yields have moved back above the 5.00% level, reaching new highs for 2026. At the same time, the DXY, which measures the strength of the U.S. dollar against its major rivals, continues to display a bullish trend and remains above the 100-point mark. Both markets have strengthened following the latest comments from Federal Reserve officials and continue to attract increasing investor interest.

Source: TradingEconomics

This combination of factors is not particularly favorable for gold. Both the U.S. dollar and Treasury bonds are commonly viewed as defensive assets, and bonds also provide a yield that gold does not offer. As a result, the simultaneous strength of these markets can reduce the relative attractiveness of the precious metal in the short term. As long as expectations for a more aggressive Federal Reserve remain intact and alternative markets continue to gain strength, XAU/USD may continue to face difficulties recovering lost ground, leaving selling pressure as a relevant factor in the sessions ahead.

Gold Technical Forecast

Source: StoneX, Tradingview

• The uptrend line is back in a risk zone: Although gold had been attempting to maintain a well-defined bullish trendline over recent weeks, recent weakness has begun to challenge the strength of that structure. If selling pressure continues to dominate in the short term, the bullish trendline could lose relevance and open the door to a more sustained bearish bias in the weeks ahead.
   

• RSI: The RSI continues to trade below the 50 neutral level, a reading that suggests selling momentum has become increasingly relevant in recent sessions. As long as this behavior persists, the bearish bias may continue to dominate price action.
   

• MACD: A similar picture can be observed in the MACD, whose histogram remains below the 0 neutral level. This reading indicates that short-term moving average momentum has begun to lose bullish strength and supports the view that a more consistent bearish bias is emerging within the market.
   

Key Levels to Watch:

• $4,480 – Key Resistance: An important upside barrier that coincides with the most recent highs on the chart and partially aligns with the 200-period simple moving average. Price action moving back toward this area could restore relevance to a bullish bias and revive the uptrend structure that dominated market behavior in previous weeks.
   
• $4,330 – Near-Term Barrier: The main equilibrium zone within the chart and a level that was respected multiple times during the previous week. As long as prices continue to trade near this area, a sense of neutrality may prevail and a broader range-bound phase could develop.
   
• $4,170 – Critical Support: An important support zone located below both the bullish trendline and the 50-period simple moving average. A move back toward this level could reinforce a more dominant bearish bias, confirm a break of the existing bullish structure, and begin shaping a more established downtrend in the weeks ahead.
   

Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25