On October 23, gold has been broadly weakening, with the core driver being the escalating geopolitical tensions between the United States and Iran. Before the U.S. midterm elections conclude, the tense atmosphere in the Middle East continues to intensify, directly pushing crude oil prices sharply higher, and the most immediate impact of elevated oil prices is a renewed upward pressure on global inflation expectations.
U.S. inflation data had already shown signs of rebounding last month. If oil prices remain persistently high, it will be difficult for U.S. inflation to fall back quickly, which would once again fuel market expectations for Federal Reserve rate hikes. This is the fundamental reason behind gold's recent sustained pressure and decline.
From a technical perspective, gold has already broken through key support levels and entered a clearly weak downtrend, fundamentally shifting the current market landscape. As the decline continues, the 4070-4080 range that previously served as strong support for gold prices has now completely transformed into the primary short-term resistance zone overhead. At this stage, without any significant bullish catalysts, it will be very difficult for gold to stage a rapid reversal. In the short term, the market will likely enter a phase of repeated bottom-testing at low levels with weak range-bound trading, and the overall mood will remain subdued and bearish.
However, despite the broadly weak conditions, it is absolutely not advisable to blindly chase shorts at these low levels. After all, gold prices have gradually approached the critical support zone around the 3950 level, which marked this year's lowest point in June and July. This means the downside room from here is already very limited. If geopolitical tensions suddenly ease or market sentiment improves, low-priced gold could trigger an oversold rebound at any time. Therefore, directly chasing shorts at this point carries extreme risk, as positions can easily get trapped right at the floor. This is a highly inadvisable approach.
Where to focus going forward
The best trading approach at this stage is to patiently wait for opportunities and prioritize steady, trend-following operations. In the short term, maintain a bearish bias, but all short-selling actions must wait for gold to rebound and recover into the 4070-4080 resistance zone and show signs of stalling before entering. For those looking to buy the dip, do not rush in either. Patiently wait for a confirmed stabilization signal at the bottom, or consider entering when gold approaches the prior strong support at 3950 and the current low around 3980.
Why patience matters in a weak market
In a weak, range-bound market, keeping your hands steady, avoiding impulsive moves, and seizing opportunities at the high and low ends of the range is the most reliable rhythm. For today's short-term trading levels, the following can be referenced: First, gold can be considered for a long position if the market revisits the 3980-4000 level, with the upside target initially at the 4066-4070 range, and if bullish momentum extends further, the 4080-4100 level. The stop-loss for the long position can be placed at 3965. Second, if the market stages another short-term rebound, watch the primary resistance around 4070-4080 for signs of rejection before considering a short entry. The stop-loss for that short position can be set at 4095 to guard against a one-sided rally, with the downside target at the 4000-4020 area for initial exit.
The article content is for reference only and does not constitute investment advice. Investors who act on this information do so at their own risk.
Comments