Gold holds at October lows amid shifting rate expectations

On Wednesday, gold traded around 3,940 USD per troy ounce, stabilising near its lowest levels since early October. The precious metal remains under pressure from a recalibration of interest rate expectations, as markets adopt a more cautious outlook on further easing by the Federal Reserve.

Several Fed officials have recently struck a neutral tone, aligning with Chair Jerome Powell's hawkish rhetoric last week, which suggested the October rate cut could be the final one for the year. Market-implied probabilities for a December rate cut have subsequently fallen to 69%, down sharply from 90% before the latest FOMC meeting.

With the release of official US data hampered by the ongoing government shutdown, investor attention is turning to private-sector labour market reports for guidance. Further headwinds for gold stem from easing trade tensions and China's decision to revoke tax incentives for certain jewellery retailers. This move could dampen physical demand in the world's largest gold market.

Nevertheless, a broader shift towards risk-off sentiment across global markets may renew the metal's appeal as a traditional safe-haven asset.

Technical analysis: XAU/USD

Four-hour chart

On the H4 chart, XAU/USD is forming a consolidation range around 3,970 USD. A breakdown from this range is expected to trigger a decline toward 3,880 USD, potentially followed by a corrective rebound to 4,020 USD (testing the broken level from below). The subsequent resumption of selling pressure could drive the pair towards 3,660 USD, where the current correction may conclude, setting the stage for a new upward wave towards 4,400 USD. The MACD indicator supports this bearish near-term view, with its signal line below zero and pointing downward, confirming ongoing corrective momentum.

One-hour chart

On the H1 chart, the market is consolidating around 3,971 USD. A break below this level could trigger a further decline towards 3,790 USD. The Stochastic oscillator aligns with this outlook, as its signal line hovers above 80 and appears poised to reverse downward toward 20, indicating building selling pressure.

Conclusion

Gold remains under pressure as expectations for a Fed cut are scaled back and concerns about physical demand emerge. While risk-off sentiment may provide intermittent support, the near-term technical structure favours further declines. A sustained break below 3,970 USD could accelerate the move towards 3,790–3,880 USD, although a deeper correction to 3,660 USD may ultimately offer a more compelling buying opportunity ahead of the next major rally.