Gold Rebounds, but the Market Is Still Waiting for a Major Catalyst
The 10-year US Treasury yield touched 5.365% before reversing lower toward the end of the trading session. Meanwhile, the US Dollar remained strong, limiting gold's recovery after XAU/USD touched $4,066. With economic data relatively limited, gold has struggled to find a stronger catalyst to resume its broader upside momentum.
A strong 10-year Treasury auction eventually helped push the benchmark yield lower. Meanwhile, the latest Federal Reserve meeting minutes showed that most policymakers expected another interest rate hike could still be appropriate toward the end of the year.
Middle East Risks Keep Oil Prices Elevated
Oil prices moved higher again as investors reassessed a fresh wave of geopolitical risks in the Middle East.
Reports from the Pentagon said the US military had ordered US Central Command (CENTCOM) to complete preparations ahead of a possible resumption of large-scale combat operations in Iran. No final decision has been made, but speculation suggests a potential conflict could occur before the US midterm elections in November.
US President Donald Trump also said he was not interested in reaching an agreement with Iran in the near term.
Meanwhile, another report said a tanker approximately 51 nautical miles north of Madinat ash Shamal, Qatar, was hit by a projectile. Reports indicated casualties, raising concerns that the incident could trigger a stronger US response toward Iran.
The market is also monitoring the possibility of continued conflict between the Houthis and Saudi Arabia. Saudi Arabia claimed that the Houthis had targeted King Khalid International Airport in Riyadh with ballistic missiles.
Oil markets are additionally facing supply concerns related to storm activity in the Gulf of Mexico, adding another layer of uncertainty to the energy outlook.
China Market Reopens After Golden Week
Beyond pressure from the Fed minutes, which pointed to the possibility of one more rate hike before the end of 2026, the gold market received some support as China returned from its Golden Week holiday.
Traditionally, Golden Week marks the beginning of the peak season for gold buying in China. However, Citigroup said preliminary consumption data during the holiday period was disappointing. Official data on tourism and consumer spending is expected to be released later, which could provide a clearer picture of Chinese demand.
The reopening of the Chinese market remains an important factor for gold, particularly given China's role as one of the world's largest gold consumers.
US Jobless Claims in Focus
Tonight's economic calendar will focus on US initial jobless claims, scheduled for release at 19:30 WIB. The report is expected to show an increase from 198K to 200K.
However, jobless claims have generated relatively limited reactions in gold in recent weeks. At the same time, weekly claims have frequently put pressure on the precious metal when the actual figures come in slightly stronger than expected.
Overall, gold appears to be waiting for the US Consumer Price Index (CPI) report on October 14, which could become a key catalyst for the next major move. Until then, XAU/USD may remain relatively range-bound through the end of the week.
Markets will continue to monitor geopolitical developments, US-Iran relations, and movements in Treasury yields.
Gold Technical Outlook
The daily candlestick closed bearish, indicating that downside pressure remains present. Gold's decline stalled at $4,066, followed by a rebound toward $4,143 this morning.
However, the recovery does not yet indicate strong buying momentum. In other words, the current rebound remains vulnerable and could quickly lose momentum if buyers fail to push prices higher.
Downside risks remain significant, particularly because gold lacks a strong near-term catalyst capable of triggering a sustained recovery. The October 14 US CPI report is likely to be one of the most closely watched events by gold traders.
Meanwhile, Treasury yields and the status of US mediation efforts between the United States and Iran remain key factors weighing on gold.
From a technical perspective, we continue to see potential downside targets around $4,045 and $4,000, while a deeper decline toward $3,965 remains possible.
On the bullish side, gold would need to break and sustain gains above $4,220 to open the door to a stronger reversal and improve the short-term bullish outlook.