Gold market analysis

"Gold Price Severely Oversold in Short Term, Rebound Possible" – Completed on 10/6/2026 at 10:47  
After breaking below $4,310 yesterday, gold prices continued to fall, breaching several key levels consecutively, dropping below $4,300 and then $4,200. The $4,210 level, located at the 180-degree angle of Gann's square, was also clearly breached. The sudden sharp decline was initially triggered by Friday’s stronger-than-expected non-farm employment report released by the U.S. Department of Labor, reigniting market expectations for earlier Federal Reserve rate hikes this year. Tonight, the U.S. will release its May CPI data, with an expected annual increase of 4%, which could further push market expectations toward an earlier tightening cycle by the Fed. 

On the other hand, recent military clashes have once again erupted between the United States and Iran. Yesterday, an American Army Apache helicopter was shot down by Iran. The U.S. Central Command stated that it had carried out defensive strikes against Iran in response, while Iran claimed to have targeted U.S. military bases stationed across multiple Middle Eastern countries. Although the conflict is unlikely to escalate into a prolonged military confrontation, it has still triggered sharp short-term volatility in financial markets. Gold prices have come under pressure, partly due to the return of a scenario where oil and gold move inversely, as well as expectations of high inflation and rising interest rates. Technically speaking, gold plunged into a bear market within just two trading days at the end of January and early February this year! 

The hope for gold prices to rebound above $4,400 this week is likely to be dashed. As seen on the daily chart, after breaking below the 50-day SMA (currently around $4,606) on March 18, gold has been in a steady decline. Subsequent rallies have been repeatedly capped by the 50-day SMA, with the rebound at the end of May even constrained by the 20-day SMA (currently around $4,468). Yesterday, prices broke below the lower boundary of the balanced descending channel formed since mid-April, remaining overall within the broader balanced descending channel established since January 29. 

Measuring the trend since March 23 using the TD line, the downside target for gold is $4,085. Support would emerge if prices break below the Gann square's 135-degree angle at $4,110. Additionally, with the daily RSI now dropping to 22, further decline would push gold into a severely oversold zone, creating conditions for a rebound. However, on the hourly chart, the RSI has already fallen to 12, increasing the likelihood of a strong intraday bounce. Therefore, it is still recommended to buy when reversal signals appear in the form of bullish candlesticks on the hourly or even 5-minute charts, targeting $4,270. Shorting is not advised. 

The above content is for reference only and does not constitute investment advice.