Gold Technical Analysis Today: Can XAU/USD Hold Above the $4,200 Barrier?

Gold is experiencing renewed selling pressure, with XAU/USD dipping toward $4,195 during the Asian morning session on Tuesday. The precious metal is struggling to maintain ground as traders reassess the Federal Reserve’s policy trajectory heading into December’s critical monetary decision.

Fed Rate Cut Expectations vs. Market Hawkish Concerns

The narrative around the December FOMC meeting has shifted noticeably. CME FedWatch data shows traders are now pricing in a 90% probability of a 25 basis point rate reduction—a significant jump from the 66% expectation recorded in November. However, this apparent “dovish” backdrop masks a deeper concern: the Fed’s communication tone could prove decisively hawkish.

Market participants are increasingly wary of what’s being termed a “hawkish cut”—a scenario where the central bank reduces rates while signaling no further easing ahead. Such a policy stance would prop up the US Dollar, directly weighing on the dollar-denominated commodity. As Peter Grant, vice president and senior metals strategist at Zaner Metals, noted: “The market is waiting for the Fed decision and for more guidance on policy.”

This dynamic creates an asymmetric risk for gold: markets may price in rate cuts, but the accompanying rhetoric could disappoint bullish positioning.

Employment Data Holds the Key

Before the Fed’s Wednesday announcement, critical US labor market indicators will hit the wires on Tuesday. The ADP Employment Change four-week average and JOLTS Job Openings reports for September and October represent make-or-break data points for rate cut conviction.

Should these employment figures come in softer than expected, it could reinforce the case for more aggressive Fed easing, providing a lifeline to gold prices. Weaker labor metrics would logically support lower interest rates, reducing the opportunity cost of holding non-yielding assets like precious metals. Conversely, robust employment data could cement the Fed’s hawkish narrative and extend gold’s downside.

Geopolitical Safe-Haven Bid Provides Limited Support

Against this backdrop of Fed uncertainty, mounting tensions between the US and Ukraine add layers of unpredictability. Recent accusations from President Donald Trump toward Ukrainian leadership have reignited geopolitical friction, traditionally a gold-positive factor. However, this safe-haven bid appears insufficient to offset the headwinds from Fed policy recalibration and dollar strength.

The technical picture remains challenging for bulls, with XAU/USD finding resistance near the $4,200 level—a zone that will prove critical for determining whether this dip represents a technical bounce opportunity or the beginning of a more sustained correction.