Where we are: Gold is trading just above the $4,300 level, staging a solid recovery after Wednesday’s sharp 2% sell-off. The yellow metal found strong support overnight near the $4,280 region, clawing back yesterday’s Fed-induced losses to trade firmly in positive territory as the European session progresses. We are watching the $4,315 resistance level closely, which represents the pre-FOMC pivot point, with the intraday tone decidedly bid ahead of the New York cash open.
What’s driving it: The structural tailwind from falling real yields is reasserting itself, with the US 10Y TIPS yield drifting down to 2.14%, reducing the opportunity cost of holding non-yielding bullion. This underlying support is clashing with geopolitical developments as President Trump’s interim agreement to reopen the Strait of Hormuz initially dented crude oil, yet the broader relief and removal of Iranian sanctions are paradoxically fueling an asset-allocation bid back into precious metals. While the FOMC’s hawkish tone yesterday initially dented sentiment, the market is viewing the post-Fed dip as a buying opportunity given the modest speculative positioning. This resilient tone is being amplified by the broader dollar index slipping 0.51% to 119.50 and US 10-year Treasury yields easing 4 basis points to 4.43%.
- US 10-year real yields (TIPS) easing to 2.14% (-1.0bp d/d) provides a structural floor for bullion against hawkish Federal Reserve projections.
- The signing of the US-Iran interim peace agreement and reopening of the Strait of Hormuz has triggered a rotation out of crude oil (-4.48%) and into gold as sanctions lift.
- CFTC speculative positioning is remarkably clean at +173,837 contracts, sitting at just the 33rd percentile of its 52-week range, indicating significant dry powder to chase a break higher.
NY session focus: All eyes now turn to the 08:30 ET data double-header, where the Philly Fed Manufacturing Index (expected at 9.8) and weekly Unemployment Claims (expected at 225k) will dictate the immediate direction of US yields. A softer-than-expected claims print will likely fuel the real yield compression trade, clearing the path for XAU/USD to test the key psychological $4,330 level. The trade that is working is buying intraday pullbacks to $4,285, while the risk lies in a hot Philly Fed print prompting a hawkish repricing of the Fed’s terminal rate. The pain trade for the street is a rapid squeeze back toward $4,350 as under-allocated macro funds scramble to rebuild longs.