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

Gold Talk

Gold has rallied from a new monthly bottom ($1643) after the US CPI report, but it may struggle to maintain the return from the yearly low ($1615) if it fails to defend the starting range for October.

Gold is vulnerable after failing to defend its monthly opening range.

The price of gold appears to be repeating August's price action as it follows the negative slope in the 50-Day SMA ($1711). The precious metal may continue to fall as Treasury yields increase to new yearly highs.

Expectations for higher US interest rates appear to be dragging on gold as the Federal Reserve maintains its current approach to combating inflation. Bullion may face additional headwinds ahead of 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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The CME FedWatch Tool anticipates a 90% chance of another 75bp rate rise amid sustained US price growth, and the FOMC may offer hawkish forward guidance for the rest of the year to manage inflation.

Gold may follow the negative slope in the 50-Day SMA ($1711) as it tries to stay above the moving average, and it may give up the rebound from the yearly low ($1615) if it fails to defend October's opening range.

Gold is at a new monthly low ($1643) after failing to hold above the 50-Day SMA ($1713), and it may continue to follow the moving average's downward slope, as it did in August.

A close below $1648 (50% expansion) will place $1601 (38.2% expansion) to $1618 (50% retracement) on the radar, with a break below $1584 (78.6% retracement) bringing the April 2020 low ($1568) into play.

Failure to close below $1648 (50% expansion) may result in range-bound gold prices, with a climb over $1690 (61.8% retracement) to $1695 (61.8% expansion) enhancing the chance of another challenge of the moving average.