Gold climbed to $4,050 during Wednesday's Asian session, attracting some bargain hunting and partially reversing the previous day's sharp decline. The dollar paused its gains after Tuesday's rally, fueled by strong US inflation data that had pushed it to a near two-week high, and renewed hopes for US-Iran diplomacy provided some support for the precious metal. However, market expectations of more aggressive monetary tightening by the Federal Reserve should limit any significant upside for the non-interest-bearing asset, requiring bulls to remain cautious. U.S. Secretary of State Marco Rubio said Tuesday after the G7 foreign ministers' meeting in Paris that economic pressure on Iran has been so damaging that large-scale military action is not currently necessary. This came after President Trump downplayed escalation concerns following the midterm elections. In fact, Trump stated that the possibility of a renewed U.S. attack on Iran was extremely low, adding that negotiations to end the Middle East conflict were gaining positive momentum. Meanwhile, Iran urged the U.S. to meet its demands in its plan to reopen the Strait of Hormuz. This fueled optimism about a potential diplomatic breakthrough in the U.S.-Iran conflict, thus suppressing the dollar as a safe-haven asset. However, increasing market acceptance of a December rate hike by the Federal Reserve, further reinforced by Tuesday's U.S. CPI report, supported the dollar. The U.S. Bureau of Labor Statistics reported that the overall CPI rose 0.4% month-over-month in October, higher than the market expectation of 0.3%; the core CPI, excluding volatile energy and food prices, rose 0.3% , unchanged from September and exceeding the expectation of 0.2%. Furthermore, Federal Reserve Governor Christopher Waller warned that a stronger-than-expected core CPI of 0.3% could prompt him to consider a 50-basis-point rate hike at the December 8-9 policy meeting; he added that a mere 25-basis-point hike would jeopardize the Fed's credibility. Additionally, Philadelphia Fed President Anna Paulson pointed out that sustained tightening is needed to push inflation back to 2%; Dallas Fed President Lori Logan stated that rate hikes may need to be at a faster pace than previously anticipated. This is beneficial for dollar bulls and should suppress gold. Waller's remarks delivered a significantly more hawkish signal, with his FXS speech tracking score of 9/10 , well above the historical average of 7.3/10, highlighting a clear inclination towards further tightening. His conditional support for a 0.5 percentage point rate hike in December if October's core CPI is 0.3% or higher, and his stance of supporting at least a 25-basis-point rate hike even with better data, demonstrates a strong reaction to any signs of inflation deviating from its target. The emphasis on the breadth of price increases, expectations of further increases in producer prices and energy pressures, and the view that policy is "not yet sufficiently restrictive" have all reinforced the upside risks to US Treasury yields and short-term interest rates. The FXS Fed Sentiment Index rose 3.17 points to 145.50 , confirming a decisive deepening into hawkish territory. Technically, gold on the 1-hour chart shows some resilience below the 200-hour simple moving average (around 4024) , suggesting potential trend support; however, prices remain capped by the 23.6% Fibonacci retracement (4080) , and after repeated failures near the 4150 resistance level recently, the short-term tone is generally neutral. The Relative Strength Index (RSI) is around 41 , suggesting only slight downward fatigue; the Moving Average Convergence Divergence (MACD) has risen back into positive territory, indicating that bearish momentum is weakening rather than a clear bullish impulse. Therefore, any further upside is likely to encounter resistance at the 23.6% Fibonacci retracement level of 4080 , with a potential climb to the 4145-4150 area, where stronger supply is expected. On the downside, initial support lies at the 50.0% retracement level of 4008 and the 61.8% Fibonacci retracement level of 3975 , with deeper support at 3929 and the cycle low around 3870. On the daily chart, considering the previous trading range, this pullback has brought the price to the lower edge of the 4050-4200 range , which is the upper end of the previously marked 4050-4065 support zone – a key test of whether the range holds. If the 4050 level can be held and stabilized, the range-bound trading pattern will continue, and the price is expected to fluctuate within the 4050-4200 range. If 4050 is effectively broken, the lower edge of the range will be lost, and the next support levels to watch are 4008, 3975, 3929, and up to 3870, as indicated on the 1-hour chart. On the upside, 4080 (23.6% Fibonacci retracement) remains the first resistance level, while 4180-4225 is the upper resistance zone of this trading range. Editor's Summary: Gold is currently under pressure from both the waning safe-haven premium and the rising pricing of a Fed rate hike, with the latter being the dominant variable. Waller's hawkish comments on September 10th, including a proposed 50 basis point increase, pushed gold prices down from $4125 to the lower edge of the $4050 trading range. In contrast, the reduced safe-haven demand driven by progress in US-Iran diplomacy has provided some respite for gold due to a weaker dollar, explaining its stabilization today. $4050 is a key level to determine whether the trading range is valid. Above it are the 23.6% Fibonacci retracement level at $4080 and the upper resistance zone of $4180-$4225, while below are potential resistance levels at $4008, $3975, and even $3870. In the medium term, if the Federal Reserve does raise interest rates by 50 basis points in December and inflation expectations continue to rise, there is a high probability that gold will break below 4050 and open up the 4008-3975 range. If US-Iran negotiations continue, safe-haven demand resurfaces, or subsequent inflation data softens, gold prices may hold above 4050 and retest the 4080-4150 range. Key attention should be paid to the magnitude of the Fed's December rate hike (25 or 50 basis points), the transmission of producer prices and energy inflation, and the substantive progress of US-Iran negotiations and the reopening of the Strait of Hormuz.