FX.co ★ XAU/USD, GOLD

Gold (XAU/USD) surged on Thursday, climbing more than 1.1% to near $4,148 an ounce. Lower U.S. Treasury yields and reduced market expectations of an immediate interest rate hike by the Federal Reserve in October provided strong support for the non-yielding metal. While Thursday's U.S. Producer Price Index (PPI) report showed a sharp increase in wholesale price pressures—with the overall PPI jumping to 6.3% year-on-year, exceeding market expectations of 5.3%, and the core PPI rising to 5.0%—investors generally believed the market had already priced in these figures, given the significant increase in the Consumer Price Index (CPI) data released on Wednesday. Consequently, market participants lowered their expectations for near-term monetary tightening, reducing the probability of a 25-basis-point rate hike at the Federal Open Market Committee (FOMC) meeting scheduled for October 28 to around 26%. This new assessment was reinforced by more dovish stances from several top central bank officials, including San Francisco Federal Reserve President Mary Daly and Fed Governor Michelle Bowman, who indicated that an immediate rate hike might not be necessary at the next meeting. This shift in market expectations led to a sharp decline in US Treasury yields and the US dollar, directly benefiting the precious metals market. The yield on the benchmark 10-year US Treasury note fell 10 basis points to close near 5.089%, while the US Dollar Index (DXY) declined 0.4% to around 102.11. Meanwhile, mixed domestic economic data further complicated the overall economic picture. US retail sales rose 0.8% month-over-month in September, exceeding the previous forecast of 0.3%, while initial jobless claims for the week ending October 10 totaled 199,000. Although the long-term interest rate futures market still reflects a 92% probability of a Federal Reserve rate hike at its December meeting, institutional investors are focused on the short-term slowdown in yield momentum and are closely watching Federal Reserve Chair Kevin Warsh's speech at the International Monetary Fund's annual meeting for further policy guidance.

From a technical analysis perspective, after hitting a weekly low of $4,073 on Wednesday, the gold/dollar price successfully rebounded to the key psychological level of $4,100 and stabilized near $4,150. Despite this tactical bounce, the overall technical trend remains bearish. However, oscillating indicators, such as the 14-period Relative Strength Index (RSI), are showing initial signs of stabilization, with buying activity increasing near the lower end. To confirm a clear bullish reversal, spot gold prices must decisively break above the immediate resistance level of $4,200, which would pave the way for a test of the 100-day simple moving average at $4,245 and the 50-day simple moving average near $4,334. Conversely, to regain control of the market, gold must fall below the key initial support level of $4,100. A sustained decline below this level could lead to a test of the October 14 low of $4,073, the July 29 cycle low of $3,996, the July 17 swing low of $3,959, and ultimately, the key yearly support level of $3,941.