Gold Is Trading the Rates Problem Again
Spot Gold (XAUUSD) is lower Wednesday with the dollar and long-term Treasury yields turning back up. It opened near the top of its range and has been sliding since. Tuesday’s bounce off the low gave buyers a chance to build something. They didn’t get far before the rates trade came back.
The front end isn’t the problem. It’s the long end, where bond sellers haven’t gone anywhere.
At 10:24 GMT, spot gold is trading at $4,116.76, down $47.10 or -1.13%. It opened at $4,166.64, reached $4,170.00 and bottomed at $4,114.14.
Fed Minutes Can Move the Next Leg
The Federal Reserve puts out the minutes from its September meeting Wednesday afternoon. That’s the meeting that delivered a 25-basis-point hike. Gold traders want to know how much support it really had inside the committee.
October has gone quiet. FedWatch is at 78.4% for a hold on October 28, with the rest on another quarter-point hike.
December is still the problem. FedWatch puts the chance of at least one more hike by the December 9 meeting at 84.7%. One weak jobs report didn’t end the tightening cycle for anybody.
What gold traders want out of the minutes is how worried officials are about inflation and how much they think higher long-term yields are already doing their tightening for them. Gold goes into the release sitting just above Tuesday’s low.
Christopher Waller, Neel Kashkari and Alberto Musalem are all on the calendar Wednesday too. The minutes and the auction are the cleaner read.
Gold Price Forecast
Every new Gold analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all Gold forecastsBond Sellers Came Back to the Long End
The 10-year was back near 5.324% Wednesday, a couple of basis points off Monday’s highest level since 2002. The 30-year hit 5.706%.
The two-year isn’t doing much, still near 4.806% and well under last week’s high. Friday’s Non-Farm Payrolls report calmed the front end without bringing buyers back into long-dated Treasuries.
That split is what gold is trading. Inflation, debt issuance and how much yield it takes to get anyone into long-term paper are all still on the table.
Monday’s ISM services numbers gave bond sellers more to work with. The headline cooled. Prices paid went the other way, up to 74 with its 12-month average at the highest since March 2023. That’s why the payrolls dip in yields didn’t stick.
Wednesday’s $39 billion 10-year note auction is the other test. Bond buyers are still demanding more yield. Gold feels it every time they get it.
The Dollar Is Firm Again and Gold Is Paying for It
Dollar buyers showed up near 101.800 Tuesday, and the U.S. Dollar Index was back at 102.318 early Wednesday. That was enough to take the wind out of gold.
Tuesday’s dollar dip was a pause. The index is still well above its 50-day and 200-day moving averages.
A firm dollar with long-term yields climbing is a rough mix for gold. Monday’s dollar high at 102.535 is right there.
Central Banks Are Still Buying, but They Cannot Stop a Rates Selloff
Gold still has longer-term support. China’s central bank added to its gold reserves for a 23rd straight month in September. Geopolitical risk remains high, oil is still elevated and government debt concerns have not gone away.
None of that holds the metal up with the dollar firm and the 10-year where it is.
Yemen didn’t move it either. Saudi-backed government forces said they took back coastal ground near the Bab el-Mandeb Strait and drove the Houthis out of much of what they grabbed last month. Gold traders are watching yields first.
Daily Spot Gold (XAUUSD) Technical Analysis
Spot gold is trading lower Wednesday after failing to extend Tuesday’s bounce from $4,103.52. The main trend is down according to the daily swing chart.
A trade through $4,399.67 will change the main trend to up. A move through $4,103.52 will reaffirm the downtrend.
The first resistance is the long-term 61.8% level at $4,230.51. Overtaking this level could extend the recovery into the 50% level at $4,319.61, followed closely by the 50-day moving average at $4,331.64.
On the downside, a break through $4,103.52 would expose the main bottoms at $3,996.06, $3,959.80 and $3,942.10.
What to Watch
The Fed minutes and the 10-year auction are what gold has to get through Wednesday. Both hit with the dollar firm again and the long end back near its highs.
I’m watching the 10-year more than any single line in the minutes. The auction shows what it costs to get somebody to own long-dated paper right now. Gold has been trading off that number all week. The minutes are the other half. Traders already know the committee hiked in September. What they don’t know is how many officials saw the jump in long-term yields as doing some of the Fed’s work for it. That’s the part that decides how December stays priced. The dollar is the third piece. It’s back within reach of Monday’s high with gold leaning on its own low.
Spot gold topped at $4,170.00 early and slid back toward Tuesday’s $4,103.52 low by mid-morning in London. The bias is to the downside while the main trend is down and spot gold remains below the 61.8% level at $4,230.51 and the 50-day moving average.
