XAU/USD range play extends amid geopolitics, ahead of US inflation test

• Gold extends its struggle below $4,200 early Tuesday as geopolitical risks weigh.
• US Dollar pinned down by retreating Oil prices and US Treasury bond yields.
• Technically, the daily bearish RSI continues to caution Gold buyers.

Gold continues to move back and forth in a narrow range below $4,200 in Asia on Tuesday, consolidating its recovery from two-month troughs.

Despite a broad-based US Dollar (USD) retreat from an 18-month peak, Gold keeps facing headwinds from geopolitical risks in the Middle East and between Russia and Ukraine.

These keep expectations for high inflation alive, even as Oil prices and US Treasury bond yields are off their recent multi-month highs.

According to The Guardian, “Saudi Arabia has been forced to suspend all flights to and from its main international airport in Riyadh until next Saturday after a further round of Houthi missile attacks caused more damage and left one person dead.”

More missiles were fired at Saudi Arabian cities by the Houthis on Monday, a Saudi Arabian military spokesperson said.

Meanwhile, Ukrainian President Volodymyr Zelenskyy on Monday accused Russia of continued missile and drone attacks on Ukrainian energy infrastructure. This came after US President Donald Trump claimed that Moscow had agreed to an "energy ceasefire" aimed at sparing energy-related infrastructure in Russia and Ukraine.

However, the downside in the non-yielding bullion appears capped by the sharp sell-off in Asian stocks, hit by tumbling artificial intelligence (AI) stocks and profit-taking as the third-quarter earnings season begins.

Additionally, increased bets that the US Federal Reserve (Fed) will hold interest rates this month continue to support Gold. Traders now look forward to Wednesday’s US Consumer Price Index (CPI) data release for fresh insights on the Fed’s interest rate outlook for the rest of this year.

The inflation report is one of the last major economic releases before the US Federal Reserve's (Fed) monetary policy meeting due later this month.

Analysts at Societe Generale highlight that, beyond geopolitics, “the week's main non-geopolitical event comes on Wednesday with the release of US CPI.” They argue that if “we see a pickup in core inflation to 2.5% (the market consensus), there will be little chance of any shift in market expectations: no rate hike this month, but a very strong chance of one in December and another in Q1.”

In the meantime, geopolitical developments worldwide will keep influencing the Gold price action.

In the daily chart, XAU/USD trades at $4,184.28. The metal remains under a clear bearish bias as it holds below the 50-day simple moving average (SMA) at $4,339.65, the 100-day SMA at $4,252.86 and the 200-day SMA at $4,527.18, keeping the broader downtrend in place despite a modest rebound from recent lows. The 14-day Relative Strength Index at 45.10 is mid-range and slightly recovering, which hints at easing bearish momentum rather than a decisive shift in trend.

On the topside, initial resistance is located at the 100-day SMA near $4,252.86, with a subsequent barrier at the 50-day SMA around $4,339.65; a sustained break above these clustered averages would be needed to soften the prevailing negative tone, while the 200-day SMA at $4,527.18 marks a more distant cap and a key medium-term hurdle. On the downside, the next notable support sits at the upward trendline break level around $4,001.82, where buyers may attempt to defend the broader bullish structure from earlier in the year.