Gold at a Support Level: Key Areas to Watch!

Gold prices hovered around US$4,134 per troy ounce during Tuesday's trading (Oct 6), remaining under pressure following a sharp correction. Fundamentally, gold is actually supported by a weakening US labor market; September's Non-Farm Payrolls (NFP) added only 29,000 jobs, and the unemployment rate rose to 4.2%. These conditions have sharply reduced expectations for a Federal Reserve interest rate hike in October.

However, this support has not been enough to lift gold prices, as the US dollar and Treasury yields remain elevated. The 10-year Treasury yield briefly touched around 5.35%, while the dollar held firm at high levels. This environment forces gold to compete with yield-bearing assets and increases pressure on dollar-denominated metal prices. The market also remains wary of inflation risks—driven largely by high energy prices and conflict in the Middle East—meaning the Fed still has grounds to maintain a tight monetary policy.

From a technical perspective, the daily gold structure remains bearish. After failing to hold the 4,400 and 4,300 levels, the price has faced continued downward pressure and is now approaching the critical support level of 4,100. Interestingly, the Stochastic RSI is currently in the low range of 23–27, suggesting that selling momentum is reaching oversold territory. However, the Stochastic RSI lines have yet to provide a strong signal of a bullish reversal, leaving the risk of further declines open.

Regarding potential scenarios, the 4,100 level is crucial. If the price holds above this area and the Stochastic RSI begins to turn upward, gold could stage a technical rebound toward 4,200 and subsequently test the 4,300 level. Conversely, if the 4,100 level is breached amidst strong selling pressure, the bearish trend could extend toward 4,000, which serves as the next psychological support level. Therefore, for the time being, the rebound cannot yet be considered a trend reversal until the price gradually reclaims resistance levels.

Newsmaker observes that Gold is currently caught in a tug-of-war between emerging fundamental support and persistent bearish technicals. While a weak NFP report has indeed eased pressure stemming from interest rate hike expectations, the dollar and high yields remain headwinds. The market's next key focus is the FOMC Minutes; should the Fed begin to express greater concern regarding labor market weakness, the likelihood of a gold rebound increases. However, as long as yields remain high and the 4,100 level fails to hold, the risk of a correction toward 4,000 must still be considered.