Gold price drops almost 3% after hot US PCE data and Fed policy weigh on demand

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Gold slides 2.91% today to $3904.88

Highlights

Gold prices were volatile near $4,000 after higher-than-expected US September PCE inflation data and a new Federal Reserve policy decision.
Demand for gold softened due to rising US Treasury yields, partly offset by ongoing central bank buying from China, India, and Turkey.
Gold trades below key moving averages with bearish momentum signals, forecast to move within a $3,821 to $3,956 range and high probability of further downside.

Central bank buying partially offsets yield-driven demand drop

Gold experienced significant price fluctuations around the $4,000 level after higher-than-expected US September PCE inflation data was released and a new Federal Reserve monetary policy decision was announced. Rising US Treasury yields weighed on demand, offset only in part by continued central bank purchases from emerging economies such as China, India, and Turkey. Geopolitical events and macroeconomic conditions have remained key market drivers. There were no significant regulatory or product changes affecting gold directly.

Anton Kharitonov, expert at Traders Union, highlights persistent structural weakness in gold as bearish momentum accelerates after the Federal Reserve decision and hot PCE data. He notes sellers dominate all key timeframes, with moving averages aligned negatively and price action worsening near major support. Sentiment remains fragile, especially as increased yields pressure demand while central bank buying is not enough to reverse the trend. Macro risks and volatility further threaten stability, suggesting downside scenarios should be prioritized for now. "Until we see clear reversal signals or fundamental shifts, I view gold as exposed to continued declines and traders should approach with heightened caution."

Viktoras Karapetjanc, expert at Traders Union, emphasizes ongoing institutional and central bank demand for gold despite recent weakness. He sees resilient support from emerging economies as a signal that longer-term bullish structures can recover if macro tailwinds shift. Rising US yields are a challenge, but the market remains full of opportunity and setups for attentive investors. Karapetjanc believes fresh upside can emerge quickly given gold’s strategic importance. "I am confident the current pullback presents attractive entry points and bullish potential remains strong for gold in the medium term."

Jainam Mehta, market strategist, notes gold is holding just above the $3,893 support with downside momentum still prevailing. He points to key technical indicators suggesting oversold risks yet sees room for tactical buys if a reversal emerges. Mehta also observes that volatility may offer contrarian entry setups as sentiment gets stretched. "A decisive move above $3,956 could trigger a short-covering rally — but I would keep stops tight and look for signals of a rebound before committing capital."

Persistent downside bias as major averages and signals turn bearish

XAU/USD continues to trade well below its short-, medium-, and long-term moving averages, with the latest prices at $3,904 compared to the MA-20 at $4,113, MA-50 at $4,223, and MA-200 at $4,373. This positioning indicates persistent downward pressure from sellers across all horizons, and the prevailing trend remains bearish as shown by the MA-50 vs MA-200 alignment. Near-term resistance stands at $3,956 while support sits at the near-term floor of $3,893. Momentum signals are overwhelmingly negative across the board. The Moving Average Convergence Divergence (MACD) and Average Directional Index (ADX) both call for further selling, and the Relative Strength Index (RSI), Stochastic RSI, and Commodity Channel Index (CCI) all issue sell signals, with RSI at 36 suggesting the pair is trending towards oversold territory. Buyers hold some intraday dominance per Bull/Bear Power (BBP) at 10.05, but the indicator calls conditions overbought. The Awesome Oscillator is neutral and does not provide confirmation. The pair opened nearly flat and is now trading near the day's low after slipping $117.24 or 2.91%, with intraday volatility at 3.53%. Action remains heavy to the downside after the open, consistent with the bearish momentum signals.

Previously it was reported that the Reserve Bank of India announced the early redemption date and price for the Sovereign Gold Bond 2021-22 Series VII, providing clarity on exit options for investors. In the current environment, traders should closely monitor the $3,821 support level, as a break below this threshold could indicate renewed downside momentum in gold prices over the near term.

Source of Data: XAU Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

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