During the U.S. trading session on Thursday (October 22), spot gold extended its decline, breaking below the $4,100 mark with losses exceeding 2%.
Tensions in the Middle East have raised concerns about energy-driven inflation, reinforcing market expectations that interest rates will remain elevated for an extended period.
Spot gold traded below $4,050, hitting its lowest level since August 4.
Reports indicate that the United States and Israel have drafted plans to launch a new round of strikes against Iran following the U.S. midterm elections, potentially targeting Iran's energy infrastructure directly.
Meanwhile, the conflict between Saudi Arabia and Houthi forces continues to escalate, with reports that Saudi Arabia's Shaybah oil field and King Fahd International Airport have come under fresh attacks.
The U.S. State Department has ordered the departure of non-emergency government employees and their family members from Saudi Arabia.
The steady stream of geopolitical developments has fueled market worries that Middle East energy supplies will face further disruptions, keeping oil prices at elevated levels.
West Texas Intermediate (WTI) crude traded around $100, near a five-week high.
This sustained energy shock has pushed inflation in major economies above central bank targets, forcing policymakers to raise borrowing costs.
Gold generates no interest income, so higher rates erode its appeal—even though gold has historically been viewed as a safe-haven asset and an inflation hedge.
The longer the conflict persists, the longer central banks may need to maintain tight monetary policy.
Traders are now awaiting next week's Federal Reserve policy meeting.
The market widely expects the U.S. central bank to hold rates steady at this meeting, following a 25 basis point hike in September.
Traders have already priced in another rate hike in December, with the CME FedWatch Tool showing an 89% probability, and markets will closely watch the Fed's signals on the rate path.
Previously, AI investment concerns weighed on equities, driving capital into U.S. Treasuries, pushing yields lower and pulling the dollar back from multi-month highs; now, hawkish expectations are supporting dip-buying that has brought flows back into the dollar.
The U.S. Dollar Index traded around 101.60 in intraday action after touching a three-week low of 101.45.
The benchmark 10-year U.S. Treasury yield stood at approximately 4.593%, down 3.22%.
Despite the recent pullback, Treasury yields remain elevated.
Combined with a stronger dollar and lingering rate hike expectations, gold is likely to remain under pressure; any rebound in gold prices will likely encounter a fresh wave of selling.
Technical Analysis: Spot Gold Breaks Below Lower Bollinger Band, Bearish Momentum Intensifies
On the daily chart, spot gold has fallen sharply, with prices effectively breaking below the lower Bollinger Band at $4,058.50 and touching a low of $4,034.36.
Gold continues to trade below the 20-period Simple Moving Average (SMA), which serves as the Bollinger Band midline at $4,151.16, while also sitting beneath the MA50 and MA100 medium- to long-term moving averages.
The moving average system is applying downward pressure, and the short-term outlook is clearly bearish.
The Relative Strength Index (RSI) reads 36.30, in weak territory but not yet in deeply oversold conditions, suggesting there is still room for downside pressure to release.
The MACD indicator has turned bearish, and the previously weak rebound momentum has completely faded, with bearish forces now in control.
On the upside, the first resistance level is the 20-period Simple Moving Average (Bollinger Band midline) at $4,151.16; next is the upper Bollinger Band at $4,243.82.
Only if gold can sustain a break above these levels would a larger rebound space open up, targeting the previous high of $4,696.55.
On the downside, the lower Bollinger Band at $4,058.50 has already been breached, turning from support into rebound resistance; the current immediate low is $4,034.36.
If prices continue to decline, the next target is the $4,000 psychological level, with deeper support at the previous low of $3,943.65.
Gold trading below the lower Bollinger Band represents an extreme deviation, and there is a short-term possibility of a pullback correction toward the $4,058.50 area; however, as long as any rebound fails to hold above $4,151.16, the overall bearish trend remains intact, and rebound rallies are likely to face a fresh round of selling.
As of 01:58 Beijing time, spot gold was quoted at $4,046.57 per ounce, down 2.28%.
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