Gold Holds at September Bottom as Dollar Strength and Treasury Yields Pressure Prices
Gold prices edged lower on Thursday, briefly testing support at the September 18 low of $2,546.86 before rebounding slightly to $2,555.05. While the metal held steady above this level, a stronger U.S. dollar and rising Treasury yields continued to weigh on its appeal. Investors are watching key U.S. economic data and Federal Reserve commentary later today that could shape gold’s near-term direction.
September Bottom Acts as Key Support for Gold Prices
Thursday’s retest of the September low at $2,546.86 has provided a critical support level for gold. Should this level fail, gold could see increased selling pressure, with the next significant level around the 200-day moving average near $2,397.91. However, for now, $2,546.86 has served as a steady floor, helping to limit further losses despite a challenging environment.
Dollar Strength Dampens Gold’s Role as Inflation Hedge
Gold’s recent weakness is largely driven by the continued rally in the U.S. dollar, which has reached a one-year high and made gold more expensive for international buyers. This dollar strength, combined with steady Treasury yields, has overshadowed gold’s traditional role as an inflation hedge. Exinity Group Chief Market Analyst Han Tan noted that “gold bulls have wilted in the face of the rampant dollar,” despite inflationary signals tied to recent policy moves under President Trump.
Traders Await Key Economic Data and Fed Remarks
Markets are now awaiting the release of October’s Producer Price Index (PPI) report, which is expected to show a 0.2% monthly increase and could influence the Fed’s stance on future rate cuts. Remarks from Fed Chair Jerome Powell and other officials today will likely be closely analyzed for any indications on rate direction. Market expectations suggest a strong probability of a 25 basis-point rate cut in December, which would mark the Fed’s third reduction this year.
Market Forecast: Short-Term Bearish Outlook for Gold
With a strong dollar and robust Treasury yields, the short-term outlook for gold remains bearish. If prices fall below $2,546.86, a decline toward $2,520 could materialize. However, if the support at the September low holds, there is potential for a modest recovery, possibly toward the $2,604.39 resistance level. For now, gold is under pressure, and further downside appears likely if U.S. dollar strength continues.
