On October 26, last Friday we noted that elevated market expectations for a Federal Reserve rate hike in December, combined with continuously rising oil prices intensifying inflation concerns, were providing support for the Fed's tightening stance. Under the pressure of high interest rate expectations, gold prices remained under strain, and short-term technical indicators also showed that bearish forces held the upper hand, with risks of further declines. In terms of trading strategy, we suggested watching upside resistance at $4,050, followed by $4,090, and downside support at $4,000, followed by $3,943.
Looking at the subsequent price action, after the Asian session opened last Friday, gold rebounded slightly to $4,032 before facing resistance and dropping sharply to stabilize at $3,986. Gold then recovered in choppy trading and reclaimed the $4,000 psychological level. After the U.S. session opened, prices rose to $4,304 before encountering resistance and pulling back again, hitting a fresh daily low of $3,975. After stabilizing, gold traded sideways around the $4,000 level. Overall, gold remained under short-term pressure and extended its decline, consistent with our expected direction.
According to a star analyst at Wolfinance, gold came under persistent pressure in late October, breaking below the $4,000 psychological level, with the core reason being that interest rate logic temporarily overshadowed safe-haven logic. Specifically, escalating tensions in the Middle East drove oil prices continuously higher, with Brent crude hitting a new five-month high. The geopolitical conflict did not boost gold prices; instead, the surge in oil prices reinforced inflation expectations, raising expectations for a Fed rate hike and weighing on gold. The U.S. dollar and Treasury yields pulled back from highs in late October but failed to provide support for gold—rather, gold fell even more, as this decline was also driven by a liquidity squeeze triggered by a sharp selloff in AI technology stocks, with safe-haven capital flowing into U.S. Treasuries rather than gold. Market expectations for an October rate hike had already been fully priced in after cooling, while December rate hike expectations remained elevated, creating a delicate situation where good news exhausted becomes bad news, putting pressure on gold prices.
On the daily chart, gold broke downward last week, losing the $4,100 psychological level and hitting a new three-month low, with short-term performance leaning bearish. For downside support, attention can be paid to last week's low of $3,975, followed by the one-year low of $3,943, and the $3,900 psychological level. For upside resistance, attention can be paid to last Friday's high of $4,034, which is also near the monthly Bollinger Band middle track, followed by $4,066, the low point from the past two-plus months before gold broke downward last week. The 5-day moving average has formed a death cross pointing downward, the MACD indicator shows a death cross pointing downward, the KDJ indicator's death cross is slightly slowing, and the RSI indicator's death cross is slightly turning upward. Short-term technical indicators show that bearish forces hold the upper hand, and gold faces risks of continued declines.
Intraday reference for gold: Middle East tensions are driving oil prices continuously higher, intensifying inflation concerns and providing support for the Fed's tightening stance. Expectations for an October rate hike have been fully digested after cooling, while December rate hike expectations remain elevated, creating a delicate situation where good news exhausted becomes bad news—these factors are weighing on gold prices. In terms of strategy, a range-trading approach is recommended, with upside resistance at $4,034 and $4,066, and downside support at $3,975 and $3,943, followed by $3,900.
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