The gold market remains under pressure. As yields across the US Treasury curve climb to 20-year highs, market participants warn that the precious metal still has room for further declines. Fawad Razaqzada, market analyst at FOREX.com, stated in his latest precious metals report that with oil prices staying high, inflation pressures rising, and markets expecting the Fed may need to raise rates above current forecasts, precious metals are unlikely to stage a meaningful rebound in the short term.
According to the CME FedWatch Tool, markets are now pricing in a 56% probability of a 50-bASIs-point rate hike in December. This expectation has lifted the US 10-year Treasury yield to 5.15%. Razaqzada said one major reason weighing on gold and other low or zero-yield assets is ongoing weakness in the bond market. The US 10-year yield has broken above 5.0%, while the 30-year yield is testing levels last seen in 2007. Normally, falling yields reduce the opportunity cost of holding non-yielding gold, which is bullish for gold prices. Conversely, rising yields tend to push gold lower.
Mounting Technical Pressure
Beyond the bearish fundamental backdrop, Razaqzada also noted that technical resistance for gold is growing. Traders who bought during the August rally are now trapped, amplifying selling pressure in the market. He said some traders have placed their stop-losses below the recent low of $4235, and he believes gold is likely heading toward this level next.
"Gold has actually been in a larger consolidation / downtrend since its peak in January. The sequence of lower highs and lower lows has not been broken, so we cannot say the trend has turned bullish again," Razaqzada said. The bigger risk now is further liquidation of long positions, potentially larger than the previous selloffs. If gold continues falling from current levels and finally breaks the $4235 support level, it may first open the path toward $4100, and then extend lower to $4000.
Sentiment Can Still Reverse Quickly
Although he is cautious or even bearish on gold’s short-term outlook, Razaqzada also emphASIzed that market sentiment can shift rapidly and reverse at any time. He said if investors lose confidence in the Fed’s ability to control inflation or yields, the "dollar depreciation trade" may regain momentum, which would support gold, silver, Bitcoin, and currencies of countries with stronger fiscal discipline.
On the upside, he sees key resistance for gold in the $4300 to $4325 zone, followed by $4400. He will not abandon his bearish view until gold closes decisively above $4400. Overall, against the backdrop of elevated US Treasury yields and rising rate hike expectations, gold continues to face dual pressure from its non-yielding nature and capital flows. The market will keep monitoring inflation data, Fed policy signals and bond market moves to see whether they further alter the trading logic for precious metals.