Is the dot plot going to "bargain"? Gold hesitates at 3700, with 3645 being the key to success or failure.
2025-09-17 20:29:43
Spot gold came under slight pressure before the US market opened on Wednesday (September 17th), weakening from its record high near $3,700 and recently fluctuating around $3,670, hitting an earlier low of $3,659.89. Fundamentally, the dollar strengthened due to short selling and position covering, putting pressure on gold. Markets were focused on the Federal Reserve's interest rate decision and the "dot plot" expected early Thursday morning Beijing time, potentially raising volatility.
The market is generally betting on a 25 basis point rate cut by the Federal Reserve at this meeting, bringing the federal funds rate range to 4.00%-4.25%. However, disagreement over the subsequent pace and magnitude is widening: CME FedWatch shows that the market only assigns a ~6% probability to a "big" 50 basis point rate cut, while pricing in a ~80% probability of a "total 75 basis point" rate cut this year (i.e., 25 basis point cuts at each meeting this year). If the statement and the dot plot don't confirm such an aggressive pace, the US dollar is expected to recover further, and dollar-denominated gold will continue to face reflexive pressure.
Turning to macroeconomic data, recent weak employment readings have reinforced the argument for continued easing in the coming months: the non-farm payrolls increased by only 22,000 in August, and the unemployment rate rose from 4.2% to 4.3%. More importantly, the Bureau of Labor Statistics' benchmark revision indicates that total non-farm payrolls in March 2025 will be 911,000 fewer (-0.6%) than previously reported. This means the constraint on the "maximum employment" goal has increased, theoretically bullish for gold. However, the June Summary of Economic Projections (SEP) still shows that the median official only projects a 50 basis point rate cut in 2025, with 25 basis points each in 2026 and 2027—significantly weaker than current market pricing. If the new SEP maintains a "slower and more cautious" approach, gold may struggle to sustain buying from the realization of dovish expectations.
The composition and communication of officials could also create unexpected volatility. The latest development is the Senate confirmation of White House economic advisor Stephen Miran to the Board of Governors, which the market interprets as a dovish voice potentially supporting a deeper rate cut. Meanwhile, Michelle Bowman and Christopher Waller have recently emphasized "incremental easing while maintaining vigilance against inflation." If the dot plot shows widening internal divergence (e.g., simultaneous dissent between those advocating a 50 basis point rate cut and those advocating for "holding tack"), this would widen the fluctuation range of the US dollar and real interest rates, making gold more susceptible to sharp short-term fluctuations.
The Fed's path deduction perspective:
1) If the interest rate is unexpectedly cut by 50 basis points: Gold may surge in volume at the first opportunity, but if the Chairman explains in the press conference that it means "pre-emptive interest rate cuts in exchange for an observation period", the market will price in a lower price for subsequent cuts, and the probability of the US dollar rebounding and gold prices rising and then falling will increase.
2) If the interest rate is cut by 25 basis points as expected and the dot plot moves significantly downward (especially if the median reduction in 2025 is raised to ≥75 basis points): the US dollar weakens, nominal and real yields decline, and gold is expected to challenge above 3700 for the second time.
3) If it only points to “one or two” interest rate cuts in 2025: the US dollar will strengthen accordingly, and under the dual pressure of “safe haven + interest rate”, gold is more likely to retrace to test the support level of 3645.00 or even lower.
In addition, the "focus" of the statement and press conference is also critical: if the chairman is more concerned about employment and growth, it will be bullish for gold; if he emphasizes the stickiness of inflation and the resurgence of risks, it will be bearish for gold.
Looking at the 60-minute chart, the middle Bollinger Band is at 3683.62, the upper Bollinger Band at 3705.15, and the lower Bollinger Band at 3662.10. On September 16th, the price briefly reached 3702.93 before reversing course. The following trading day, the price moved down along the middle band and hovered above the lower band, reaching an intraday low of 3659.89. The candlestick chart shows a long upper shadow above 3700, followed by a mean reversion to the lower band—a trend of weakening, reflecting the characteristics of a retracement phase after the Bollinger Band width has widened.
MACD: DIFF is -4.46, DEA is -1.44, and the MACD histogram is -6.04 and continues to "expand green", indicating that momentum is tilted towards the short side. There has not yet been a "volume decay" or "bottom divergence" signal near the zero axis. RSI (14) points to around 38.83, which is in the "lower edge oscillation band" between the weak zone and the oversold threshold, indicating that the short-term rebound is still the main pressure.
Support/Resistance Reference: Below, watch for 3662.10 (lower Bollinger band), 3645.00 (horizontal key price), and 3626.58 (previous low). Above, resistance is seen at 3683.62 (middle Bollinger band/average resistance), 3702.93 (previous high), and 3705.15 (upper Bollinger band). Currently, the price is trading between the middle and lower Bollinger bands, suggesting a weak range. A retest of 3683.62 and a retest of the hourly level would trigger a retest of 3700. Conversely, a break of 3662.10 would open the door to a possible retest of 3645.00.
Over the past two weeks, driven by the narrative of weakening employment, the market quickly prioritized a "25 basis point rate cut at each meeting this year," leading to a rebound in risk appetite in equities and credit assets. However, on the final decision day, concentrated short-covering in the US dollar triggered a broad-based strengthening of the US dollar—the exogenous catalyst for gold's decline that day. Options (as evidenced by straddle pricing and convergence in spreads) were already primed for a "volatility spike" in event volatility, demonstrating that sentiment leads, prices follow.
Market sentiment tends to simplistically align with the "rate cut = buy gold" equation, but tonight's key focus lies in the path and rhythm, not the one-time point value. If the dot plot fails to meet the crowded expectations of a "25 basis point" rate cut each year, disappointing selling pressure will more directly impact precious metals. In other words, gold prices are more likely to experience moderate directional fluctuations in the short term based on "expectation gaps," rather than a one-way rally.
Fundamentals: The dollar's "short covering" coupled with uncertainty in forward guidance suppresses marginal buying demand for gold
The market is generally betting on a 25 basis point rate cut by the Federal Reserve at this meeting, bringing the federal funds rate range to 4.00%-4.25%. However, disagreement over the subsequent pace and magnitude is widening: CME FedWatch shows that the market only assigns a ~6% probability to a "big" 50 basis point rate cut, while pricing in a ~80% probability of a "total 75 basis point" rate cut this year (i.e., 25 basis point cuts at each meeting this year). If the statement and the dot plot don't confirm such an aggressive pace, the US dollar is expected to recover further, and dollar-denominated gold will continue to face reflexive pressure.
Turning to macroeconomic data, recent weak employment readings have reinforced the argument for continued easing in the coming months: the non-farm payrolls increased by only 22,000 in August, and the unemployment rate rose from 4.2% to 4.3%. More importantly, the Bureau of Labor Statistics' benchmark revision indicates that total non-farm payrolls in March 2025 will be 911,000 fewer (-0.6%) than previously reported. This means the constraint on the "maximum employment" goal has increased, theoretically bullish for gold. However, the June Summary of Economic Projections (SEP) still shows that the median official only projects a 50 basis point rate cut in 2025, with 25 basis points each in 2026 and 2027—significantly weaker than current market pricing. If the new SEP maintains a "slower and more cautious" approach, gold may struggle to sustain buying from the realization of dovish expectations.
The composition and communication of officials could also create unexpected volatility. The latest development is the Senate confirmation of White House economic advisor Stephen Miran to the Board of Governors, which the market interprets as a dovish voice potentially supporting a deeper rate cut. Meanwhile, Michelle Bowman and Christopher Waller have recently emphasized "incremental easing while maintaining vigilance against inflation." If the dot plot shows widening internal divergence (e.g., simultaneous dissent between those advocating a 50 basis point rate cut and those advocating for "holding tack"), this would widen the fluctuation range of the US dollar and real interest rates, making gold more susceptible to sharp short-term fluctuations.
The Fed's path deduction perspective:
1) If the interest rate is unexpectedly cut by 50 basis points: Gold may surge in volume at the first opportunity, but if the Chairman explains in the press conference that it means "pre-emptive interest rate cuts in exchange for an observation period", the market will price in a lower price for subsequent cuts, and the probability of the US dollar rebounding and gold prices rising and then falling will increase.
2) If the interest rate is cut by 25 basis points as expected and the dot plot moves significantly downward (especially if the median reduction in 2025 is raised to ≥75 basis points): the US dollar weakens, nominal and real yields decline, and gold is expected to challenge above 3700 for the second time.
3) If it only points to “one or two” interest rate cuts in 2025: the US dollar will strengthen accordingly, and under the dual pressure of “safe haven + interest rate”, gold is more likely to retrace to test the support level of 3645.00 or even lower.
In addition, the "focus" of the statement and press conference is also critical: if the chairman is more concerned about employment and growth, it will be bullish for gold; if he emphasizes the stickiness of inflation and the resurgence of risks, it will be bearish for gold.
Technical aspects:
Looking at the 60-minute chart, the middle Bollinger Band is at 3683.62, the upper Bollinger Band at 3705.15, and the lower Bollinger Band at 3662.10. On September 16th, the price briefly reached 3702.93 before reversing course. The following trading day, the price moved down along the middle band and hovered above the lower band, reaching an intraday low of 3659.89. The candlestick chart shows a long upper shadow above 3700, followed by a mean reversion to the lower band—a trend of weakening, reflecting the characteristics of a retracement phase after the Bollinger Band width has widened.
MACD: DIFF is -4.46, DEA is -1.44, and the MACD histogram is -6.04 and continues to "expand green", indicating that momentum is tilted towards the short side. There has not yet been a "volume decay" or "bottom divergence" signal near the zero axis. RSI (14) points to around 38.83, which is in the "lower edge oscillation band" between the weak zone and the oversold threshold, indicating that the short-term rebound is still the main pressure.
Support/Resistance Reference: Below, watch for 3662.10 (lower Bollinger band), 3645.00 (horizontal key price), and 3626.58 (previous low). Above, resistance is seen at 3683.62 (middle Bollinger band/average resistance), 3702.93 (previous high), and 3705.15 (upper Bollinger band). Currently, the price is trading between the middle and lower Bollinger bands, suggesting a weak range. A retest of 3683.62 and a retest of the hourly level would trigger a retest of 3700. Conversely, a break of 3662.10 would open the door to a possible retest of 3645.00.
Market Sentiment Observation: Expected Crowding and Volatility Repricing at the "Official Announcement Moment"
Over the past two weeks, driven by the narrative of weakening employment, the market quickly prioritized a "25 basis point rate cut at each meeting this year," leading to a rebound in risk appetite in equities and credit assets. However, on the final decision day, concentrated short-covering in the US dollar triggered a broad-based strengthening of the US dollar—the exogenous catalyst for gold's decline that day. Options (as evidenced by straddle pricing and convergence in spreads) were already primed for a "volatility spike" in event volatility, demonstrating that sentiment leads, prices follow.
Market sentiment tends to simplistically align with the "rate cut = buy gold" equation, but tonight's key focus lies in the path and rhythm, not the one-time point value. If the dot plot fails to meet the crowded expectations of a "25 basis point" rate cut each year, disappointing selling pressure will more directly impact precious metals. In other words, gold prices are more likely to experience moderate directional fluctuations in the short term based on "expectation gaps," rather than a one-way rally.
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