The previous day, after the Federal Reserve cut interest rates by 25 basis points as expected, spot gold prices briefly surged to a record high of around $3,707. However, this price quickly retreated as expectations materialized and the dollar rebounded, closing down approximately 0.88% on Wednesday. On Thursday (September 18), gold prices traded around $3,640 during the North American trading session, with volatility remaining high.

Fundamentals

The Federal Reserve has initiated a new round of interest rate cuts, lowering the target range for the federal funds rate to 4.00%-4.25%. The statement cited recent slowdowns in economic activity, a cooling labor market, and rising downside risks to employment, with inflation, while declining from its peak, remaining above the 2% target. The dot plot suggests the possibility of two more rate cuts this year, but this is not a consensus, with nine of the 19 members predicting only one or no further rate cuts. The median path for 2025 points to an additional 50 basis points of easing, corresponding to a target range of 3.50%-3.75%. The central bank moves down to 3.4% and 3.1% in 2026 and 2027, respectively, with the long-term interest rate anchored at 3.0%.

The latest State Economic Projections (SEP) show that real GDP growth in 2025 has been revised upward to 1.6% (previously 1.4%), while the unemployment rate forecast remains at 4.5%. PCE inflation and core PCE inflation are expected to be 3.0% and 3.1%, respectively, consistent with the June forecast. Regarding data, initial jobless claims fell to 231,000 in the latest week, beating market expectations of 240,000 and following an upward revision to 264,000 the previous week. The Philadelphia Fed Manufacturing Index rebounded sharply to 23.2 in September, exceeding expectations of 2.3 and the previous reading of -0.3, indicating a stronger-than-expected recovery in regional manufacturing.

At the press conference, Powell defined this action as a "risk-managed rate cut," emphasizing that "there is no pre-set path and the policy will be assessed meeting by meeting." He also stated that there was no broad support for a more aggressive 50 basis point rate cut, and that a "fast-forward" easing policy was unnecessary in the short term. This communication framework has a double-edged impact on gold: on the one hand, the downward trend in the nominal interest rate path and moderate growth are conducive to the precious metal's long-term discount environment; on the other hand, if sticky inflation resurfaces or employment stabilizes, the pace of rate cuts could slow at any time, offsetting any temporary positive effects.

Technical aspects:

Looking at the hourly chart (60 minutes), the middle Bollinger Band is at 3665.14, the upper Bollinger Band at 3689.67, and the lower Bollinger Band at 3640.62. After hitting a high of 3707.35 yesterday, the price retreated and is currently consolidating around 3640, between the lower and middle Bollinger Bands. This suggests the market is still in a "weak rebound-mean reversion" phase in the short term. The Bollinger Band width is approximately $50, and volatility is at a medium-high level. A typical "bandwidth contraction" signal has not yet appeared, and further trend extension requires renewed momentum.



Regarding momentum indicators, the MACD shows DIFF at -3.65, DEA at -4.13, and a histogram of approximately 0.97 turning positive, forming a "weak golden cross" below the zero axis. This type of golden cross is often seen in technical pullbacks after a decline, indicating that short-term momentum is weakening but bulls have not yet established dominance. The relative strength index (RSI) (14) is near 41, still some distance from the strong range (>50), and the short-term focus is on correction.

Structure and Price: Focus on support around 3626.58 and 3633.85. A break below this level raises the risk of a sentimental retest towards the 3600 mark. Above, the middle Bollinger Band near 3665 presents primary resistance; above this lies the 3689-3702 area (the upper band and the previous high of 3702.93), and further still, the historical high of 3707.35. If the price can complete the three-step confirmation phase of "retracement, stabilization, and increased volume" above the middle band, the Bollinger Bands may shift into a trend phase characterized by an upward shift of the middle band and a widening of the upper band. Otherwise, the trend remains range-bound.

Market sentiment observation:

The interplay of macroeconomic expectations fulfillment and micro-trading profit-taking at high levels was the primary factor behind yesterday's surge and subsequent decline. The interest rate cut itself wasn't new news, and while the dot plot was dovish, it retained flexibility. This gave trend-setting funds confidence in the long-term decline in interest rates, while also forcing short-term funds to remain cautious about the "uncertain pace." The simultaneous rebound in the US dollar and US Treasury yields reinforced the misalignment between nominal bullishness and short-term bearishness, leading to a typical market sentiment swing characterized by a surge, then a decline, and a rapid wash-out.

Judging from the resonance between volume, price, and indicators, the MACD-Histogram has turned positive, while the RSI remains below 50, suggesting a shift in sentiment from a panic pullback to a cautious recovery. The lack of significant convergence in the Bollinger Bands suggests a lack of consensus, with traders preferring to "take advantage of price swings" rather than "follow the trend." For gold, the tussle between "path-dependent easing expectations" and a "phased dollar rebound" will continue, creating a neutral to bullish sentiment pattern characterized by a coexistence of greed and caution.