Spot gold continued to face selling pressure during Tuesday's Asian session, with XAU/USD trading near $4,125. In the previous trading day, gold prices plunged more than 4% at one point, touching a low of around $4,110, the weakest level since August 5.
The recent pressure on the gold market has mainly come from persistently rising U.S. Treasury yields and expectations that the Federal Reserve will maintain a relatively tight interest rate policy going forward. The U.S. 10-year Treasury yield had earlier climbed to its highest level since June 2007 before pulling back somewhat. The rapid rise in Treasury yields directly increases the opportunity cost of holding non-yielding gold, while also enhancing the appeal of dollar-denominated assets, causing gold to face noticeable deleveraging pressure in a short period.
The simultaneous rise in high yields and high oil prices is forming the most significant double suppression factor currently weighing on the gold market. Rising energy prices have further amplified this impact. Crude oil prices regained strength after being supported by supply risks and uncertainty surrounding the Middle East situation, and rising energy costs could transmit through transportation, manufacturing, and consumption channels into overall inflation. When the market becomes concerned again about persistent inflation pressures, U.S. interest rates may remain elevated for a longer period, further pushing up real yields and weakening gold's allocation appeal.
Looking at recent price performance, gold's earlier upward momentum has clearly weakened. Commerzbank analysis suggests that the simultaneous rise in both real and nominal yields is an important factor behind the recent pressure on precious metals. As a non-yielding asset, gold is more vulnerable to capital reallocation pressure in an environment of continuously rising yields. If U.S. Treasury yields continue to stay elevated, any short-term rebound in gold may still face significant constraints.
Meanwhile, the market is reassessing the outlook for U.S. monetary policy. This week, the United States will release the Personal Consumption Expenditures price index (PCE) and employment-related data, both of which could serve as important references for judging the future interest rate path. If inflation or employment data come in weaker than market expectations, the dollar and Treasury yields may come under pressure, thereby providing room for a temporary rebound in gold. If the data continue to show economic resilience while inflation pressures remain elevated, the market may further reduce expectations for easing policy.
The linkage between oil prices and gold is also worth watching. On one hand, rising energy prices can increase inflation-hedging demand, which in theory supports gold. On the other hand, if rising oil prices lead the market to reprice the interest rate outlook and push Treasury yields higher, then the interest rate factor may temporarily outweigh inflation's support for gold. The current market presents a complex transmission relationship in which "rising oil prices are bullish for inflation hedging but bearish for gold through higher yields."
Market sentiment has therefore shifted noticeably. After gold's previous rapid rally, recent consecutive pullbacks have made investors more cautious in their risk appetite, with short-term funds paying closer attention to the dollar, U.S. Treasury yields, and changes in U.S. macroeconomic data. At the same time, after gold prices quickly fell to around $4,100, some oversold trading demand may gradually emerge, but before the trend is clearly repaired, rebounds are still more likely to be viewed as technical corrections.
Going forward, key focus should be on the U.S. PCE price index, nonfarm payrolls, and other data, as well as the immediate reaction of the dollar index and the 10-year U.S. Treasury yield after the data are released. If inflation cools, employment weakens, and yields pull back, gold could gain momentum for a rebound. If economic data remain strong and further reinforce high interest rate expectations, gold may continue to test downside support.
From the daily chart perspective, the short-term structure of XAU/USD has clearly weakened. Gold is currently trading below the 100-day moving average and the Bollinger Band middle line, while also having broken below the Bollinger Band lower line, indicating that bearish pressure remains dominant. The 14-day RSI is around 35, already approaching oversold territory, suggesting that the recent decline has been significant, but no clear trend reversal signal has yet appeared. On the upside, the first focus is the Bollinger Band lower line resistance near $4,190, followed by the 100-day moving average near $4,300 and the Bollinger Band middle line near $4,335. Only by reclaiming and holding the $4,300–$4,335 area could the daily-level weak structure be significantly alleviated. If the rebound expands further, the Bollinger Band upper line near $4,480 would constitute stronger resistance.
From the 4-hour chart perspective, gold is in a weak repair phase after its rapid decline. Although short-term selling pressure may ease somewhat, the overall trend remains bearish. The area around $4,125 is an important observation zone for the current price. If gold can hold near $4,100 and break back above $4,190, a technical rebound may unfold in the short term. If the $4,100 mark is lost, caution is needed regarding further downside searches for support. Since the RSI has already approached oversold territory, a rapid rebound cannot be ruled out in the short term, but before the key technical resistance near $4,300 is broken, the upside room for a rebound may still be limited.
Summary
The core contradiction facing gold has shifted from pure safe-haven demand to a rebalancing among U.S. Treasury yields, energy prices, and U.S. monetary policy expectations. Inflation concerns brought by rising oil prices may increase the market's expectations for a high interest rate environment, while rising yields increase the cost of holding gold, thereby suppressing short-term price performance. In the short term, $4,100 is an important psychological threshold, while $4,190 and $4,300 form the main technical resistances above. Subsequent U.S. PCE inflation and employment data will be important catalysts for whether gold can stabilize. If yields peak and pull back, gold may see a recovery. If yields continue to climb, gold prices still need to guard against the risk of further downside.
Comments