Gold Set to Resume Bullish Trend Amid Waning Expectations of Aggressive Rate Cuts
Significant rate cuts weaken expectations as they are gradually digested; gold is poised to return to a bullish trend.
On the previous trading day, Tuesday (October 8th): International gold/London gold faced resistance and fell, breaking through the recent bottom support of the consolidation range. It also touched the support target of the middle rail as expected, and is also approaching the support position of the 30-day moving average. This implies that there is limited downside potential in the subsequent market, and the pullback adjustment is about to be completed. The gold price is expected to receive bullish support near the $2600 line or the 30-day moving average support, and will once again eye an upward climb.
In terms of specific trends, the gold price opened at $2642.50 per ounce in the Asian market, and initially fluctuated and fell during the day. It touched the $2628 line at the beginning of the European market, then rebounded and strengthened, reaching an intraday high of $2652.95 at the end of the European market. Afterwards, it faced resistance and fell. After the US market opened, the bearish forces intensified, and it continued to fall. As expected, it touched the support position of the middle rail and further broke through to record an intraday low of $2604.75 at 11:30 PM. However, it then stopped falling and eventually rebounded, closing above the middle rail at $2621.74. The daily fluctuation was $48.2, and it closed down by $20.76, with a decrease of 0.79%.
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In terms of impact, as traders await more signals about Federal Reserve rate cuts, the US dollar index continued to fluctuate and adjust within a narrow range. At the same time, the yield on US Treasury bonds with a 10-year term also saw a slowdown in rebound momentum, fluctuating and adjusting within a narrow range, without further rebounding strongly, nor exerting bearish pressure on gold prices.
However, gold prices were affected by technical resistance and the bearish pullback demand of the fluctuation adjustment, as well as the bearish impact of the US market data once again exceeding expectations. The market's bets on significant rate cuts by the Federal Reserve faded, and traders took profits, suppressing gold prices to continue to fall, and ultimately closed lower.
Looking forward to today, Wednesday (October 9th): International gold opened and continued the rebound from the previous night's end, initially strengthening. However, it is temporarily facing resistance and pressure from many short-term moving averages above, and the rebound space will also be limited. Before returning to a stable position above $2660, a consolidation adjustment is expected.
In terms of the US dollar index, although the daily chart maintains a consolidation adjustment near the high rebound, there is no tendency to fall back, and the bearish forces have not strengthened. The weekly chart is also stable above the 200-week moving average, with the 5-10 week moving averages providing support, and there is still an expectation of strength in the subsequent market, which will exert certain pressure on gold prices.
For the yield on US Treasury bonds with a 10-year term, the daily chart shows that its trend is approaching the resistance of the downward trend and the pressure of the 200-day moving average. The bullish momentum has slowed down, and there is a tendency to encounter resistance and fall, which will provide certain support for gold prices. However, although the weekly chart encounters resistance at the middle rail, the 5-10 week moving averages have turned into a golden cross bullish support, and the bearish signals in the auxiliary chart indicators continue to decrease, there is still an expectation of further rebound and strength, which will exert bearish pressure on gold prices.
However, on the whole, Zhang Yaoxing believes that although the US dollar index and US Treasury bond yields still have a strong expectation in the short term, which will exert pressure on gold prices and maintain a fluctuating adjustment trend, the pressure of continuous bearing and the weakening expectation of significant rate cuts by the Federal Reserve are also gradually digested. Therefore, the market's bearish pressure will also gradually weaken, and before the meeting that is about to cut rates by 25 basis points again, gold prices will strengthen again. Even if the strength of the rate cut weakens and the US dollar index does not fall but rises, gold prices will also show a simultaneous rise trend.
Today, attention will focus on the US August wholesale sales monthly rate data, which is expected to be significantly lower than the previous value and benefit gold prices. However, according to recent data, there is also a good performance, but the overall impact on gold prices will tend to be low and rebound.Following this, attention will also be given to the 2024 FOMC voter and Atlanta Fed Chairman Bostic's welcome remarks at an event. The 2026 FOMC voter and Dallas Fed Chairman Logan will deliver a speech on the current economic situation.
Based on Bostic's comments yesterday: if monthly job gains fall below 100,000, he would question whether to consider a faster rate cut; and Collins: expects to achieve a 2% inflation target by the end of next year. The speech is expected to be dovish, which is favorable for gold prices. At the same time, it also implies that the rate cut cycle may continue until the end of next year, supporting the continued bullish outlook for gold prices.
Therefore, in summary, although data such as non-farm employment and Powell's comments are not in a hurry to cut rates, which dispelled expectations for another 50 basis point rate cut by the Fed at the next meeting, causing gold prices to encounter resistance and adjust.
However, due to the ongoing geopolitical situation still generating safe-haven sentiment, coupled with technical trend bullish support for buying, and gold prices are still in the Fed's rate cut cycle, the bulls still have a bullish outlook. Therefore, the current consolidation and adjustment are still creating entry opportunities for bullish climbs.
Technically: At the monthly chart level, gold prices rose strongly in September due to expectations of a significant rate cut by the Fed, the start of the rate cut cycle, and the escalation of global geopolitical tensions. Although there is a slight pullback at present, it is relatively small compared to the rise in September, and the bullish momentum still dominates. In addition, the distance to the bullish trend support of the 5-month moving average is also far away. Therefore, given the large space below, I think any bearish pressure will be digested, and the trend will continue to maintain a bullish trend and develop upwards. Thus, this month can still rely on the support of the 5-month moving average for low bullish entry, waiting to set a new historical high.
At the weekly chart level: Gold prices closed lower last week, failing to return to above $2660 and stabilize, with weakening bullish momentum and expectations of a pullback adjustment. This week also saw further pullback adjustments, falling below the 5-week moving average at one point, indicating that the demand for consolidation is about to be met, and the market trend will be ready for a rebound at any time. If there is further decline, the support position of the 10-week moving average below is also an opportunity for bullish entry again.
At the daily chart level: Gold prices fell further yesterday, once falling below the middle rail, but ultimately failed to stabilize below it, and the ZZ indicator has also shown a bottoming signal, implying that the space below the market is limited. $2600, or the support position of the 30-day moving average, will be an opportunity for a bullish climb again.
Intraday trading ideas for reference:
International Gold: Focus on resistance at $2629 and $2637 for short positions; focus on support at $2613 or $2600 for rebound;
International Silver: Focus on resistance at $31.10 and $31.30 for short positions; focus on support at $30.35 or $30.00 for rebound.Note:
Gold TD = (International Gold Price × Exchange Rate) / 31.1035
For every 1 USD fluctuation in the international gold price, Gold TD theoretically fluctuates by approximately 0.25 CNY.
US Futures Gold Price = London Spot Price × (1 + Gold Swap Rate × Futures Expiry Days / 365)
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