Gold (XAU/USD) found buyers near $3,632 during Asian trading on Friday, halting a two-day pullback from this week’s record peak. Heightened geopolitical tensions—stemming from the Russia-Ukraine war and fresh Middle East conflicts—helped support demand for the safe-haven asset. However, the upside remains capped by a stronger US Dollar (USD), which continues to pressure non-yielding commodities.
Dollar strength limits upside
The US Dollar Index (DXY) extended its recovery from February 2022 lows after Federal Reserve (Fed) Chair Jerome Powell struck a hawkish tone midweek. Powell acknowledged labor market softness but stressed that inflation risks remain tilted to the upside, tempering expectations for rapid easing. Alongside firmer equity markets, these dynamics have limited gold’s scope for meaningful weekly gains.
Geopolitical backdrop underpins safe-haven flows
Geopolitical headlines kept risk sentiment fragile. US President Donald Trump criticized Russia’s actions and urged allies to halt oil imports from Moscow, while European Commission President Ursula von der Leyen announced plans to accelerate the EU’s phase-out of Russian fossil fuels. Meanwhile, Israeli forces launched strikes on Hezbollah-linked infrastructure in southern Lebanon, adding to regional instability. These developments lent support to safe-haven gold during Friday’s session.
Economic data reinforces fed stance
Recent US data reinforced the dollar’s strength. Initial Jobless Claims dropped sharply to 231K in the week ending September 13, while the Philadelphia Fed Manufacturing Index jumped to 23.2 in September—its highest since January. Together, the data bolstered expectations of economic resilience, limiting gold’s upside momentum despite safe-haven flows.
Technical outlook: gold consolidates near key support
XAU/USD briefly dipped below the 200-hour Simple Moving Average (SMA) for the first time since August 22 but found support at a bullish flag pattern breakout near $3,628–$3,626. Holding this zone could stabilize prices, with resistance seen around $3,660 and $3,673–$3,675. A sustained move above $3,700 would open the door to retest the all-time high at $3,707. On the downside, immediate support rests at $3,600, followed by $3,563–$3,562 and then $3,511–$3,510, which may serve as a strong base for the metal.
