Gold prices continue to fall as HSBC casts doubts and predicts further decline

On Tuesday, October 6, during the Asian session, international spot gold continued to face downward pressure, at one point falling below the $4,110/oz level and hitting a low near $4,104, marking the second consecutive trading day of decline. With the Federal Reserve meeting minutes about to be released and both the US dollar and US Treasury yields remaining high, market sentiment is clearly bearish, making the defense of the $4,000 level once again the main focus of bulls and bears.

[News Brief]

US Treasury yields remain elevated, becoming the main obstacle to gold price increases. The 10-year US Treasury yield closed at about 5.31%, the highest since April 2002, while the 30-year yield rose to around 5.66%. Meanwhile, the US Dollar Index has strengthened and is on track to record its highest close since April 2025. This round of interplay between the forex and bond markets is putting pressure on non-interest-bearing gold in the short term.

However, market expectations for the Fed’s policy path have shifted significantly. Federal funds rate futures show the probability of a rate hike in October has dropped to around 22% to 24%, down from about 70% last week, although the risk of additional tightening in December hasn't been completely ruled out. The market's next focus will be the release of the September Fed meeting minutes at 2:00 pm (ET) on Wednesday, the weekly initial jobless claims at 8:30 am (UTC+8) on Thursday, and preliminary October consumer sentiment data at 10:00 am (UTC+8) on Friday. If labor market or sentiment data continue to weaken, this could further validate the cooling signal from the nonfarm payrolls report and so provide support for gold; if inflation expectations strengthen again, yields will likely continue to suppress gold prices.

After US personal consumption expenditures (PCE) inflation data turned out softer, traders’ bets on a Fed rate hike in October have cooled dramatically. The present market view is that there is only a 17% chance of a Fed rate hike in October, sharply down from 64% a week ago. Analysts point out that this change has dampened the previously hawkish expectations that suppressed gold, while also limiting further downside for gold prices.

At the same time, HSBC analysts have lowered their average gold price forecast for 2026 from $4,560 to $4,490, reflecting a more cautious outlook on gold’s further upside. However, the bank also emphasized that ongoing net purchases of gold by central banks worldwide remain an important pillar of support and are expected to continue limiting how deep gold price corrections may go.

[Latest International Gold Market Analysis]

Yesterday, gold once again showed a classic roller-coaster tug-of-war pattern. In early trading, international gold tested resistance at $4,163 before quickly falling back, reaching a low at $4,124; during the European session, there was a brief attempt to break above the $4,163 range, but bullish momentum remained insufficient and prices only touched $4,170 before slipping again. Late in the session, it dropped to near $4,123, and the daily chart closed with a doji, perfectly continuing the recent alternation between bullish and bearish candlesticks in this period of volatility.

From a historical technical perspective and routine patterns, today’s daily candlestick will probably close bearish. But, considering the US Dollar Index spiked and then retreated, this will provide some bottom-side support for gold, so intraday action is still likely to remain choppy within a range, rather than trending in a single direction.

Key support below: Pay particular attention to the overnight low around $4,123 — if price holds there, expect a narrow range and sideways action for the day.

If the price breaks this support effectively, gold could extend its decline to test the $4,100 level and then the critical support near $4,080. If it returns to the core support area, watch closely for signals of stabilization and recovery. Key resistance above: The early high of $4,145 is a short-term watershed between bulls and bears; if price tests this level and fails, watch for pullbacks. Once the market successfully holds above $4,145, it indicates that short-term bearish momentum is exhausted, limiting further downside for the day and putting the recent highs back in play. Strong resistance remains locked at the $4,200 level and the previous nonfarm payrolls high of $4,225.