On October 12, inflation data will be the core focus of the market this week, with the September Consumer Price Index (CPI) and Producer Price Index (PPI) about to be released, while the market also needs to pay close attention to regional manufacturing survey data and public remarks from Federal Reserve Chairman Kevin Warsh.
The timeline is as follows: September existing home sales will be released on Tuesday; the highlight on Wednesday is the CPI report; Thursday will see a dense release of PPI, September retail sales, US weekly initial jobless claims, as well as the New York Fed and Philadelphia Fed manufacturing indices.
On Thursday evening local time, which is Friday morning Beijing time, Federal Reserve Chairman Warsh will deliver a speech at the IMF meeting in Bangkok, which is another major market trigger this week. For gold, CPI is the most important short-term variable for the market.
If inflation proves stubborn, the market will further reinforce expectations of aggressive Federal Reserve rate hikes, the US dollar and US Treasury yields are expected to strengthen again, and spot gold may once again test the psychological threshold of $4,000. If core CPI declines (as Nomura predicts), the urgency for the Federal Reserve to continue raising rates will decrease, and gold is expected to hold the $4,000 support level and challenge recent highs to the upside.
In addition, the Middle East situation, international oil prices, the US dollar index, and changes in the US Treasury yield curve will jointly determine whether gold prices can convert last week's rebound into a sustained upward trend. Overall, current bullish and bearish factors for gold are highly intertwined.
Bullish support: sustained dip-buying near $4,000; expectations of continued net gold purchases by central banks worldwide; geopolitical risks in the Middle East's Strait of Hormuz have not yet been resolved; European fiscal and political uncertainty, the approaching US midterm elections, combined with persistently high market inflation expectations, all provide bottom support for gold prices.
Bearish pressure: the Federal Reserve still retains the possibility of further rate hikes, and the high interest rate environment continues to weaken the appeal of gold as a non-yielding asset; the US dollar index has risen for four consecutive weeks; although US Treasury yields have pulled back from their highs, they remain elevated; Indian gold consumption demand is relatively weak, and market trading is light during the domestic holiday period, making it difficult for physical demand to provide strong upward momentum for now.
From a technical perspective, $4,000 is no longer just a simple psychological threshold, but a bottom range repeatedly validated by the market. However, without a sudden black swan event, or a significant reversal in inflation or employment data that shifts the Federal Reserve's policy path, it will be difficult for gold prices to establish a definitive sustained rally.
This week's CPI and PPI will guide the Federal Reserve's policy direction, while the geopolitical situation in the Strait of Hormuz could trigger safe-haven buying at any time. The battle to defend $4,000 for gold continues, and significant volatility will most likely be hidden in the resonance between this week's economic data and geopolitical news.
Gold is a strategic asset with enduring long-term value and promising future potential, but the price journey is destined to be turbulent. During this transition period from the US dollar rate hike cycle to the rate cut cycle, gold prices will continue to fluctuate repeatedly. Under the suppression of rate hike expectations, gold prices will remain under pressure for a relatively long period in the medium term.
Gold prices have fallen from $5,600 as the bubble deflated to $4,000, with most of the bubble already released. The current wide-range consolidation is essentially accumulating strength for the next larger-scale rally, though this accumulation cycle will be relatively lengthy.
For long-term holders, there is no need for excessive panic. A medium-term pullback will instead bring quality opportunities for bargain positioning; while the upper highs of the consolidation range can serve as a window for short-term profit-taking and position adjustment. The core of a long-term approach is proper position management.
On the short-term level: although gold prices have rebounded, the overall situation remains a consolidation market. After a prolonged period of sideways consolidation, a short-term rebound has occurred, but the medium term does not yet have the conditions for a one-sided major rally. After gold prices rebounded above $4,185, the short-term rebound structure was confirmed, and the recommended operational approach is to focus on buying the dip at support levels. Upper resistance is in the $4,240–$4,258 range; short-term lower support is at $4,170–$4,140.
Intraday strategy: gold prices can be bought on a pullback to the $4,190 support zone; wait for a rebound to around $4,230 to watch for a pullback. Overall, the market remains in consolidation.
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