On October 23, gold fell to around 4,058, briefly slipping below the 4,050 level on a test basis to gauge market reaction. This marks the first return to the 4,000 round-number threshold since the pullback that began in July this year.
For now, setting aside whether gold can actually break below the 4,000 level, we may slow our pace on trading strategy, as shorting at highs is no longer particularly prudent given that prices have reached a relatively low point for the year. The next step is to wait for a possible entry near 4,020 to attempt a long position; if stopped out, we will remain on the sidelines.
Anything is possible during the rate-hike process, and whether the 4,000 round-number watershed bought by global central banks with real money can still serve as the final line of defense will likely become clear before long. In addition, retail traders who held onto earlier short positions may consider taking profits below 4,050. A new challenge has emerged, and after exiting shorts, it is best to stay on the sidelines rather than rush into short-term trades, focusing instead on medium-term positions.
On the technical front, the four-hour chart has given a bullish divergence signal, though gold is still leaning bearish in its current trajectory. As the pullback deepens and the gold price shifts lower, we are watching short-term resistance around 4,110-4,118, with key focus on the 4,140-4,145 zone. A rebound facing pressure is beyond doubt, as the technical picture continues to point to a corrective pullback. On the downside, we first watch the 4,000 round-number support, with key focus on the prior low near 4,050 as a resistance force.
In my personal view, the 4,000 round-number threshold is unlikely to be broken. Ahead of the Fed's rate decision and core inflation data due at the end of the month, gold will likely continue to maintain this weak range-bound pattern, with no clear single-direction trend expected for the time being. So for now, we may treat this as a box-range market, with the 4,200 round number as upper resistance and 4,000 as the supporting backdrop. A test-style break is allowed, but a fresh low near 3,960 is not acceptable. If that level breaks, we will decisively abandon bottom-fishing long positions; indeed, if gold breaks below 4,000 we will immediately call a halt to longs. Long positions are always tentative and not obligatory. If the box-range pattern is confirmed broken, we will treat the market as trending in one direction, depending on market reaction. The Fed's rate-hike path is out in the open, and gold coming under pressure is inevitable — once the hiking cycle began, gold fell under pressure, and relief will have to wait for rate cuts to arrive.
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