On October 12, we noted that the pullback in US Treasury yields from multi-decade highs had provided support for gold's rebound. However, with markets still holding strong expectations for a December Federal Reserve rate hike and the US dollar continuing to trade in a high range, gold's upside potential remained constrained. Short-term technical indicators pointed to a need for a corrective bounce, so we advised focusing on support at $4,146 and then $4,100, with resistance at $4,200 and then $4,235.
Looking at the subsequent price action, gold stabilized at $4,168 after the US session opened last Friday, then rallied toward the close, reaching an intraday high of $4,202 before pulling back slightly and failing to hold above the $4,200 round number. When trading resumed on Monday, gold tested the $4,200 level multiple times before breaking above it to reach $4,217, where it met resistance and fell back to $4,168 for support. It is currently trading near $4,174. Overall, gold has staged a short-term rebound, but the upside remains limited, with prices continuing to oscillate in a low-range consolidation pattern.
Where the rebound came from
According to a Star-rated analyst at Wolfinance, gold bounced off a two-month low last week to hit a fresh one-week high, driven by a combination of easing interest rate and currency pressures, delayed expectations for a Fed rate hike, and continued central bank gold purchases. Specifically, on the interest rate and currency front, 10-year and 30-year US Treasury yields fell from their 20-plus-year highs, while the US dollar index's rally stalled after hitting its highest level since April of last year. On the Fed policy front, markets widely expect the central bank to hold steady in October and have pushed the next rate hike to December, easing near-term selling pressure. Finally, central banks have continued to buy gold — when prices fell to around $4,000, structural buying emerged, with global gold ETFs seeing net inflows of about $10 billion in September, and China's central bank increasing its gold holdings for a 23rd consecutive month, setting a single-month record for this accumulation cycle in September.
Why the rally remains capped
Despite these supportive factors, gold's upside remains constrained, with the core obstacle being that the high interest rate environment itself has not loosened. Both 10-year and 30-year US Treasury yields remain in their 20-plus-year high range, and the US dollar index is holding near its highest level in over a year, keeping the opportunity cost of holding gold elevated. Meanwhile, the probability of a December Fed rate hike remains high, leaving gold's rebound without sustained upward momentum.
On the daily chart, gold bounced from a two-month low to a fresh one-week high before meeting resistance and pulling back into a consolidation pattern. On the downside, support can be found at the intraday low of $4,168, which was also the low from last week's European and US sessions. If gold stabilizes here, it could resume its rebound. Below that, the 5-day and 10-day moving averages near $4,150 — also near the middle band of the 4-hour Bollinger Bands — come into focus. A further decline would increase short-term downside risk, with the $4,100 round number as the next support. On the upside, resistance can be found at the $4,200 round number, followed by $4,226, the high of the recent half-month low-range consolidation, which also aligns with the middle band of the daily Bollinger Bands and the upper band of the 4-hour Bollinger Bands. A break above that would bring the weekly Bollinger Bands' middle band near $4,250 into view as the next resistance level.
Technical signals
The 5-day moving average is approaching a golden cross, the MACD is turning upward from a death cross with a tendency to form a golden cross, the KDJ golden cross is rising but slowing slightly, and the RSI golden cross has turned downward and remains in weak territory. Short-term technical indicators suggest gold has room for a rebound, but the bullish signals are weakening.
Intraday reference for gold
Easing interest rate and currency pressures, delayed Fed rate hike expectations, and continued central bank gold buying have supported gold's rebound from a two-month low. However, the high interest rate environment has not loosened, and the probability of a December Fed rate hike remains elevated, leaving gold without sustained upward momentum and limiting its rebound potential. In terms of strategy, a range-trading approach is advisable, with downside support at $4,168 and $4,150, followed by $4,100, and upside resistance at $4,200 and $4,226, followed by $4,250.
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