Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

Market update: bearish winds prevail but turnaround nears for XAU/USD levels

Gold prices turn lower following hotter-than-expected US CPI data; sticky inflationary pressures boost Treasury yields and the US dollar, creating a challenging environment for precious metals.

Source: Bloomberg

Gold prices (XAU/USD), which hit multi-month lows last week, embarked on a modest recovery in recent days. Earlier on Thursday, bullion rose to its highest point since September 27 ($1885). However, this upward momentum was abruptly halted by the release of US inflation data, which exceeded forecasts. For context, September's headline CPI increased by 0.4% month-over-month and 3.7% year-over-year, surpassing estimates by a tenth of a percent in both cases.

Sticky inflationary pressures have reignited bullish momentum for US yields, following a brief period of softness, paving the way for a strong rally in the broader US dollar. Today’s events also led traders to reprice the Fed’s terminal rate higher, raising the odds of a quarter-point hike at the December FOMC meeting to 36% from 26% a day ago.

Naturally, both gold and silver reacted adversely to these developments, erasing earlier gains and slipping into negative territory.

Market conditions for precious metals

Although prevailing market conditions will be challenging for precious metals, a glimmer of hope is beginning to emerge on the horizon. For instance, recent Fed speak, advocating patience and indicating that the US central bank will proceed carefully, suggest that policymakers are on the verge of ending their hiking campaign. With the tightening cycle winding down, both nominal and real rates will have limited upside going forward, creating a more favorable backdrop for non-yielding assets.

In summary, the fundamental outlook for gold and silver appears bearish in the short term. However, the tide may turn in their favor in the coming months, especially for the yellow metal. This could mean a strong advance for XAU/USD in the latter part of the year and heading into 2024. The chance of a more significant rally could increase should unforeseen macroeconomic hurdles appear, leading the Fed to pivot to a more dovish posture for fear of a hard landing.

Gold price technical analysis

Gold made a move toward a technical resistance zone around $1885 earlier on Thursday, only to face a swift rejection, signaling the enduring grip of sellers on the market. That said, traders should stay attentive to how price action unfolds in the upcoming days for indications of sustained weakness, as this scenario could take XAU/USD towards $1860. While gold could find support in this area on a pullback, a breakdown could open the door to a retest of the 2023 lows.

Conversely, if buyers return and spark a strong rebound, initial resistance stretches from $1885 to $1890. The bears are likely to defend this ceiling tooth and nail, but in the event of an upside breakout, we could see a move towards $1905, the 38.2% Fibonacci of the May/October decline. On further strength, the bulls could be emboldened and initiate an assault on channel resistance located in the vicinity of $1925 at the time of writing.

Gold price technical chart

Source: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Speculate on commodities

Trade commodity futures, as well as 27 commodity markets with no fixed expiries.1

  • Wide range of popular and niche metals, energies and softs
  • Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
  • View continuous charting, backdated for up to five years

1In the case of all DFBs, there is a fixed expiry at some point in the future.

Turn knowledge into success

Practice makes perfect. Take what you’ve learned in this commodities strategy article, and try it out risk-free in your demo account.

Ready to trade commodities?

Put the lessons in this article to use in a live account. Upgrading is quick and simple.

  • Deal on our wide range of major and niche commodities
  • Protect your capital with risk management tools
  • Enjoy some of the best spreads on the market – Spot Gold from 0.3 points

Inspired to trade?

Put the knowledge you’ve gained from this article into practice. Log in to your account now.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.