Gold market analysis

"Gold Price at 4390 Must Be Defended" – Completed on October 9, 2026, 11:12 AM

Volatility in gold prices intensified ahead of the release of inflation data that could influence next week's Federal Reserve interest rate decision. After touching a low of $4,341.61 during yesterday’s Asian session, spot gold formed a rare bullish engulfing candlestick pattern on the hourly chart and subsequently surged higher, peaking at $4,434.23 early in New York trading. Before London market close, prices sharply declined to $4,375.29, and have since remained within this range, fluctuating throughout the morning. On the hourly chart, an unusual diamond-shaped formation has emerged—characterized by gradually expanding volatility followed by a gradual contraction—indicating intense battling between bulls and bears from 9 p.m. to 11 p.m. last night, which has now temporarily subsided.

On the hourly chart, spot gold has broken above the upper boundary of its previous descending channel and is currently consolidating around $4,390 or above. Tonight, the U.S. will release August PPI data, a leading indicator of inflation. Since hitting a low of $74.24 on August 5, New York spot crude oil has steadily climbed to a high of $87.69 on August 20. Meanwhile, the U.S. dollar index dropped to 98.56 on August 20, down nearly 2.7% from its peak of 101.26 on July 28. Market expectations are for the overall PPI to rise 0.4% month-on-month (up from 0.1% in July), with year-on-year growth projected between 4.7% and 5.1% (previously 4.7%). Core PPI is expected to increase 0.3% month-on-month (from 0.2% in July) and 4.6% year-on-year (up from 4.2%), signaling a likely further deterioration in September’s CPI inflation (to be released in October).

Therefore, even if tomorrow’s August CPI report does not show a significant acceleration, persistent inflation above target levels will continue to pressure the Fed into raising interest rates. The key question then becomes whether Wash and the FOMC committee will choose to implement monetary policy contrary to President Trump’s views just before the midterm elections. I emphasize that a rate hike would be a reasonable move—it’s merely a matter of timing—and it remains unclear whether Fed officials completely disregard the potential strong negative reaction such a move might trigger in U.S. equities. As a result, financial markets are expected to remain highly volatile in the short term.

Regarding gold, although it currently sits above the 270-degree Gann square level at $4,410, it continues to test the $4,400 support zone intermittently, exhibiting sharp fluctuations over shorter timeframes. Personally, I anticipate that gold will retest its peak and decline again following the release of the U.S. CPI data this Friday. The main reason is that both August PPI and CPI are unlikely to reflect any cooling in inflation. As long as inflation remains elevated, the market will still face the risk of a Fed rate hike next week, making it unwise to hold long positions through the weekend. The U.S.-Iran situation represents another risk factor, and investors should pay close attention. If gold breaks below $4,390, a stronger one-way downtrend may emerge. At best, gold could trade between $4,460 and $4,410; however, if it falls below $4,410 again, the risk of breaking below $4,390 will significantly increase.

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