Gold has fallen from a high level. Is there still a chance after the sharp decline?

On Tuesday (September 30), the international gold price made a significant correction from the record high of 3871.61 set in the morning in the European session. The maximum decline hit 74 US dollars, and the lowest dropped to 3797.32. It is currently trading around 3802.11. In the context of generally favorable market information, in addition to the demand of bulls to take profits after a short-term overshoot, there are other bearish factors lurking in the market.

Gold continued its record upswing in early Asian trading, continuing to gain support from a combination of factors.

However, the ultimatum issued by the United States to Hamas and the confirmation of the government shutdown by the United States, the former is a potential bearish signal, and the latter is a bearish landing, have pressed the pause button for the previous rise in gold prices.

But in the longer term, the logic behind gold's strength remains solid. The dollar has continued to sell for a third consecutive day, driven by expectations of easing by the Federal Reserve, which may provide further support for gold prices. Traders are now watching US macroeconomic data and speeches from core members of the Federal Reserve's Open Market Committee (FOMC) for fresh trading momentum.

New positive cash to suppress gold bulls

Former US president Donald Trump failed to achieve a breakthrough on the budget in his final emergency talks with top congressional leaders from both parties, with vice-president JD Vance saying a government shutdown was a foregone conclusion as the funding impasse remained unresolved.

At the same time, Trump signed an announcement to adjust the US import policy on lumber, board and related derivatives. The week before, he had announced a 100% tariff on imports of branded or patented medicines and a 25% tariff on all heavy truck imports effective October 1. This lumber import adjustment is a further move on this basis.

It is worth noting that the government shutdown has been regarded as a key moment in the United States, and the new tariff dispute has also caused more uncertainty in international trade. However, at the moment of the relevant news announcement, the performance of gold, which has continued to rise for two days, showed that the price of gold quickly digested the positive information. Monday night and Tuesday morning's gold rally in Asian markets were the rapid pricing of these positive information.

The emergence of new bearish starts to ferment and suppress the price of gold

The US president said the US was close to brokering peace in Gaza and unveiled a 20-point peace plan. Washington also warned the Palestinian Hamas group that Israel would have full US support if it rejected the peace deal. The US statement showed its determination to end the conflict and the strengthening of American power behind it. If these events develop in the direction it advocates, it will not be conducive to the further upward movement of gold prices.

New news positive for gold

Meanwhile, Russia said on Monday that its military was assessing whether the US would provide Ukraine with some long-range missile systems to support strikes against targets deep within its territory. Such a move could trigger a significant escalation, Russian officials added, keeping geopolitical risks simmering and supporting gold prices.

The Federal Reserve's easing expectations continue to heat up, which is good for gold

Traders are now betting on a 90% chance of a 25 basis point cut in October and a near 70% chance of another cut in December, according to the CME Group Fed Watch Tool. This expectation continues to weigh on the dollar, providing support for precious metals. InAUSFOREXOn the platform, investors can access more data on interest rate futures and market sentiment.

Highlights of Tuesday's US economic data include job openings, JOLTS data, the Chicago PMI, and the Conference Board consumer confidence index. In addition, speeches by core FOMC members will also affect demand for the dollar during North American trading hours, which in turn will influence the trend of gold.

(CMEFedWatch interest rate futures rose for three consecutive days)

Technical analysis:

Previously, 3824 was mentioned as a measure of growth, but the strong atmosphere of gold going long caused the price to rely on the upward channel to advance to the next gear, which was eventually blocked.

(4-Hour chart of spot gold)

Spot gold opened at 3832 today, and then rose to test the daily ascending channel and then fell back. The first daily support is at 3796, which is at the 50% quartile of the breakout line on Monday. After that, the next support is near 3780, which is located at the intersection of the gold price on the 5th line and the breakout price that broke the new high on Monday. Spot gold above 3796 is regarded as the continuation of the bullish market, and there is currently no trend to support gold shorts.

(Daily chart of spot gold, source: Internet)

At 17:48 Beijing time, spot gold was trading at $3796.07 per ounce.