After failing to defend the monthly opening range, the gold price is vulnerable.

Gold Price Discussion Topics

The price of gold has rebounded from a new monthly low ($1643) as it attempts to reverse the loss following the release of the US Consumer Price Index (CPI) report, but it may struggle to maintain the recovery from the annual low ($1615) if it fails to defend the starting range for the month of October.

After failing to defend its starting range for the month, the gold price is susceptible.

The price of gold appears to be replicating the price action from August, as it has followed the negative slope in the 50-Day Simple Moving Average ($1711), and the precious metal may continue to decline in the coming days as Treasury yields reach new annual highs.

Expectations for higher US interest rates appear to be weighing on the price of gold as the Federal Reserve maintains its current strategy for combating inflation, and bullion may face additional headwinds prior to the next Fed interest rate decision on November 2 as it puts pressure on the Federal Open Market Committee (FOMC) to pursue a highly restrictive policy.

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In light of sustained price rises in the United States, the CME FedWatch Tool presently forecasts a greater than 90% chance of another 75bp rate hike in the near future, and the FOMC may offer hawkish forward guidance for the remainder of the year in an effort to manage inflation.

In light of this, gold may continue to track the negative slope in the 50-Day SMA ($1711) as it struggles to remain above the moving average, and gold may surrender the rebound from the yearly low ($1615) if it fails to defend the opening range for October.

Gold is trading at a new monthly low ($1643) after failing to hold above the 50-Day SMA ($1713), and the precious metal may continue to follow the August-like downward slope in the moving average.

The Fibonacci overlap at $1601 (38.2% expansion) to $1618 (50% retracement) requires a close below the $1648 (50%) expansion zone, with a break below $1584 (78.6% retracement) bringing the April 2020 bottom ($1568) into play.

However, a failure to close below the $1648 (50% expansion) region might result in range-bound gold price conditions, with a climb above the $1690 (61.8% retracement) to $1695 (61.8% expansion) region increasing the likelihood of another test of the moving average.