Spot gold staged a recovery during Friday's Asian trading session, with XAU/USD climbing back toward the $4,360 mark as markets underwent a degree of technical repair following the recent sharp correction.

The rebound is being driven by two primary factors: a notable pullback in crude oil prices that has eased concerns over accelerating inflation as energy costs decline, and a阶段性 weakening of the US dollar that has reduced the currency-related pressure on dollar-denominated gold. However, with the Federal Reserve's latest policy signals still leaning hawkish, the current upside in gold reflects more of a recovery from oversold levels rather than the establishment of a new directional trend.

Shifts in the energy market are reshaping the pricing dynamics for precious metals. Crude oil has fallen to a one-week low amid growing expectations that Middle East supply disruptions may gradually ease, with Saudi Arabia seeking to partially restore crude flows through a key pipeline, further diminishing concerns over sustained supply tightness.

The decline in oil prices implies that energy-driven inflationary pressures are cooling for now, while also reducing market fears over further monetary policy tightening. This carries dual implications for gold: lower oil prices themselves may weaken the direct inflationary support for the metal, but if falling energy costs subsequently drag down yields and the dollar, gold could find support through financial market channels.

The correlation between energy prices and gold has strengthened recently. David Meger, head of metals trading at High Ridge Futures, noted that the marked drop in energy prices is alleviating the burden on the gold market that had been created by inflationary pressures. For the current market, investors are focusing not just on safe-haven demand but on whether oil price movements can influence US interest rates and the dollar trajectory through inflation expectations.

Meanwhile, dollar weakness is improving gold's near-term environment. Since gold is priced in dollars, a stronger greenback typically raises the cost of buying bullion for investors using other currencies, while a softer dollar helps enhance gold's relative appeal. During the recent period of sustained declines in gold prices, a stronger dollar and rising US Treasury yields formed a dual headwind; thus, any weakening of dollar upside momentum tends to trigger a phased rebound in gold.

Yet the biggest limiting factor for the gold market remains US monetary policy. The Federal Reserve raised its benchmark interest rate by 25 basis points to a range of 3.75%-4.00% on Wednesday, while its policy projections still indicate at least one more rate hike this year. Rather than focusing solely on the hike itself, markets are more concerned about whether the Fed will maintain elevated rates and how long the high-rate environment will persist.

The CME FedWatch tool shows markets currently pricing a roughly 53.1% probability of another Fed rate hike in October, up from approximately 44% the previous trading day. The October hike probability climbing back above 50% suggests that expectations for Fed rate cuts are being further suppressed. If upcoming US inflation or employment data continue to show resilience, markets may raise the pricing for another hike, potentially pushing the dollar and Treasury yields higher and re-exerting pressure on gold.

The recent performance of US Treasury yields underscores that interest rate factors remain a significant drag on gold. Market strategists point out that following the Fed decision, dollar strength and rising Treasury yields had caused gold to pull back sharply, with the 2-year yield briefly nearing 4.75% and the 10-year yield approaching 5% again. Higher yields increase the opportunity cost of holding gold, which generates no interest income. When risk-free or low-risk yields remain elevated, the relative attractiveness of allocating capital to gold is diminished.

However, the current correction does not necessarily mean the medium-term bullish narrative for gold is entirely invalidated. Market strategists believe a substantial portion of the Fed's hawkish rate path is already priced into current asset valuations. If future US economic data begins to cool and markets reprice rate expectations lower, Treasury yields and the dollar could decline in tandem, potentially giving gold renewed upward momentum. Therefore, whether gold can resume a trend-like advance largely depends on whether US macro data can alter the current rate pricing.

From a sentiment perspective, gold's rebound after falling to roughly a six-week low suggests some capital is beginning to seek positioning opportunities at lower levels, though the market has not fully turned optimistic. The current price around $4,345 remains in a recovery phase following the earlier descent, with investors maintaining high sensitivity to Fed policy direction, dollar movements, and yield changes. If gold fails to break through key technical resistance, short-term capital may still opt to reduce positions on rallies.

The trajectory of oil prices also warrants close monitoring. If Middle East crude supply gradually recovers and energy prices continue to decline, market inflation expectations may cool further, which would help reduce upward pressure on interest rates. Conversely, if supply restoration falls short and oil prices climb again, energy costs could reignite inflation expectations, prolonging the Fed's restrictive rate posture and imposing fresh pressure on gold.

Three transmission channels deserve particular attention at this juncture. First, whether crude oil prices continue to retreat; second, whether US inflation and employment data can shift the October rate hike expectations; third, whether the dollar and Treasury yields can weaken in tandem. Only when the dollar and yields show more definitive downside alignment will gold's rebound be more likely to transform from a technical repair into a trend reversal.

On the daily chart, spot gold had fallen consecutively to touch roughly a six-week low before rebounding to the $4,345 area. Prices remain above the 100-day moving average, indicating the medium-term bullish structure has not been completely broken, though the short-term trend has shifted from strong gains to a consolidation phase after the correction. The 100-day MA now sits near $4,325, serving as a critical daily-level support zone; as long as gold holds above this level, room for further repair remains.

To the upside, attention first turns to the Bollinger Band mid-line around $4,435, which represents the first major resistance the rebound must overcome. If gold can decisively hold above $4,435, short-term bullish momentum could strengthen further, opening a test toward the upper Bollinger Band near $4,678. However, given the substantial distance from current prices, a direct breakthrough of that region appears challenging absent a clear weakening in the dollar and Treasury yields.

The daily RSI currently reads around 48.58, remaining in neutral territory without entering overbought or oversold conditions, suggesting that bullish and bearish forces have yet to show a decisive tilt. This neutral RSI reading aligns with the current price structure, indicating the market is undergoing a directional re-selection rather than a confirmed trend reversal. Should $4,325 fail, gold may re-test the lower Bollinger Band near $4,190; whether that zone holds will directly determine if the medium-term uptrend structure remains intact.

On the 4-hour chart, gold is forming a low-level rebound following the sharp decline, with short-term bearish momentum weakening, though the recovery trend still requires a break above forward resistance for confirmation. The $4,345 area represents the current trading zone, while $4,325 serves as key short-term support. If gold consistently holds above $4,325 and breaks through $4,435, the 4-hour rebound structure could strengthen further; if the push at $4,435 fails and prices fall back below $4,325, the market would remain in a weak consolidation pattern, potentially revisiting support near $4,190.

Overall, the current technical structure leans toward low-level consolidation and repair, with genuine trend strengthening still requiring a close above $4,435 alongside fundamental support from a weaker dollar and lower yields.

In summary, gold remains caught between hawkish policy signals and falling energy prices. Lower oil prices and a softer dollar provide near-term rebound conditions, but the Fed's maintenance of elevated rates, with the October hike probability rising to 53.1%, means gold continues to face significant opportunity cost headwinds. From a technical standpoint, $4,325 is the key support level, while $4,435 represents the crucial resistance for determining whether the rebound can expand further. If the dollar and Treasury yields continue to decline, gold may extend its low-level recovery; if stronger US data fuels higher rate hike expectations, prices could come under renewed pressure. The short-term market focus has shifted from pure safe-haven demand to the interconnected dynamics among oil prices, inflation, interest rates, and the dollar.