On October 8, Wednesday, we noted that because the market still holds high expectations for a December rate hike by the Federal Reserve, this supports the continued strength of the dollar and Treasury yields, putting pressure on gold prices. Short-term technicals also indicated that gold faces further downside risk. Therefore, we suggested that on the downside, attention should be paid to whether the $4,100 level holds; if gold breaks below, it would increase short-term pullback risk with downside space toward $4,000, while if gold holds above $4,100, upside resistance would be watched at $4,140 and $4,170.
Looking at the subsequent price action, during Wednesday's European session, gold continued to face pressure, stabilizing after falling to $4,109. As the US session open approached, gold briefly plunged, losing the $4,100 integer level. After the US session opened, gold fell further, reaching a low of $4,066, but quickly stabilized and rebounded, meeting resistance at $4,126 before pulling back to stabilize at $4,100 ahead of the close. After Thursday's open, gold held above $4,100 and continued to rebound, meeting resistance at $4,143, and is currently trading around $4,120.
Overall, gold has declined further, hitting a two-month low, broadly in line with our expectations. A Wolfinance star analyst believes that gold's recent persistent weakness is mainly driven by market expectations for further Fed tightening, which supports the dollar and Treasury yields and is the key factor weighing on gold prices. After the Fed's September rate hike, the dot plot showed one more hike within the year, and Fed officials subsequently released hawkish signals one after another, which at one point pushed up expectations for October and December hikes, supporting the rise in the dollar and Treasury yields. Although last week's PCE and nonfarm payroll data came in below expectations, and the Fed Vice Chair and a Governor made dovish remarks, essentially ruling out the possibility of an October hike, the market continues to hold high expectations for a December hike. The dollar briefly pulled back before resuming its climb, continuing to pressure gold prices.
Additionally, as the US session open approached on Wednesday, gold briefly plunged more than $50, mainly because the US Treasury market saw large-scale selling, driving Treasury yields sharply higher. Both 10-year and 30-year Treasury yields hit new highs since 2002, with yields exceeding 5%, eroding gold's appeal, pushing capital from the gold market toward high-yield Treasuries and causing gold prices to fall. The Fed meeting minutes released Wednesday evening were overall hawkish, but the minutes did not provide new bearish catalysts nor eliminate the pressure from interest rates, resulting in limited short-term impact on gold prices.
On the daily chart, after hitting a two-month low, gold's rebound has been relatively weak, temporarily stabilizing at the $4,100 integer level and maintaining low-level consolidation. On the upside, resistance can be watched near the intraday high of $4,140, followed by $4,170, a level that gold tested multiple times and was blocked at during Wednesday's Asian session. On the downside, support can be watched at the $4,100 integer level, where gold stabilized after its bottom rebound on Wednesday, followed by the recent two-month low of $4,066. If further pressure emerges, attention can be paid to the $4,000 integer level.
The 5-day moving average has formed a death cross pointing downward, the MACD indicator has formed a death cross pointing downward, the KDJ indicator is beginning to form a golden cross, and the RSI indicator has formed a death cross with a slight upturn, but all remain in weak territory. Short-term technicals show that gold bears remain dominant, and gold's rebound signal is relatively weak.
Intraday gold reference: The Fed meeting minutes were hawkish, and market expectations for further Fed rate hikes within the year support the dollar and Treasury yields in maintaining strength, continuing to pressure gold prices. In terms of trading, a range-bound approach is suggested, with upside resistance watched at $4,140 and $4,170, and downside support at $4,100 and $4,066, followed by $4,000.