On October 28, in our analysis on Tuesday, we noted that escalating tensions in the Middle East were driving oil prices higher, reinforcing inflation stickiness, and that the market still held relatively high expectations for a Federal Reserve rate hike in December. These factors were weighing on gold prices, and before the Fed's monetary policy decision was set to be announced on Wednesday, gold's upside potential was likely to remain limited. In terms of trading strategy, we suggested watching downside support at $4,000 and $3,975, followed by $3,943, while upside resistance was seen at $4,030, followed by $4,066.
Looking at the subsequent price action, after the Asian session opened on Tuesday, gold pulled back to $4,003 and stabilized, then rebounded to $4,025 where it met resistance. During the European session, prices fell to $3,989 and found support, after which gold oscillated higher. Following the U.S. session open, prices broke above the Asian and European session highs, advancing further to $4,065 and setting a new intraday high. Gold then tested this level multiple times but was consistently capped there.
Overall, gold temporarily halted its decline, stabilizing and rising near the $4,000 support level we identified, and encountered resistance at the $4,066 pressure level. The short-term price movements were largely in line with expectations. According to analysts at Wolfinance, Tuesday's rebound from the lows was directly driven by the pullback in oil prices. Specifically, officials from Saudi Arabia, Turkey, and Pakistan traveled to Tehran to engage with Iran, and the four parties agreed to continue consultations on security cooperation. This eased market concerns about further escalation in the Middle East, causing oil prices to drop noticeably and directly alleviating worries about energy-driven inflation. Inflation pressure had been one of the key factors forcing the Federal Reserve to maintain its hawkish stance. Reflecting this in price action, during the European session on Tuesday, oil prices fell from their intraday high and hit a new daily low near the close, while gold simultaneously bottomed out and rebounded from its daily low, reaching a new intraday high near the close.
Despite gold's short-term rebound, considering that the U.S. dollar also rose, once again breaking above the 102 integer level, this could limit the upside for gold prices. On the daily chart, gold has rebounded from a three-month low, with the trend temporarily halting its decline and stabilizing. For downside support, attention can be paid to $4,030, Monday's rebound high and also near Friday's high, where gold tested and met resistance during Tuesday's Asian and European sessions, followed by the $4,000 integer level. For upside resistance, focus on whether gold can break through the $4,066 level, which was Tuesday's rebound high and a level where gold faced resistance multiple times afterward. It was also the low point over the past two-plus months before gold broke downward last week. A upward breakthrough would further ease short-term downside pressure, with attention then turning to the $4,100 integer level and the daily Bollinger Band middle line at $4,120.
The 5-day moving average death cross is slowing slightly, the MACD indicator is turning up from a death cross, and the KDJ and RSI indicators are beginning to form golden crosses. The short-term technical picture suggests gold has a need for stabilization and rebound correction after consecutive declines. Intraday reference for gold: Market concerns about the Middle East situation have been partially resolved, and oil prices have pulled back from highs, easing inflation pressure, which supports gold's short-term rebound. However, the simultaneous rise in the U.S. dollar could limit the upside for gold prices. In terms of strategy, a range-bound approach is recommended, while also paying attention to the potential impact of the evening's Federal Reserve interest rate decision. Downside support can be watched at $4,030 and $4,000, while upside resistance focuses on whether the $4,066 level can be broken, with a breakthrough opening the way to $4,100 and $4,120.
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