The price of gold rebounded by nearly $150. What happened?
2025-10-22 14:36:40
Spot gold prices bottomed out and rebounded during the Asian and European trading sessions on Wednesday (October 22nd), falling to $4,004.46 per ounce in early Asian trading before recovering to around $4,150 during European trading. Currently trading around $4,145 per ounce, up approximately 0.5%. Precious metal prices edged higher, supported by bargain hunting, driven by concerns about the impact of the US government shutdown and ongoing concerns about unsustainable global government debt.
Growing market expectations that the Federal Reserve will cut interest rates by another 25 basis points at its October policy meeting could push gold prices higher. Lower interest rates could reduce the opportunity cost of holding gold, supporting the non-yielding precious metal.
On the other hand, trade tensions between the United States and China appeared to be easing as the two sides plan to reach a deal before a November 1 tariff deadline. This could weaken safe-haven demand.
Looking ahead, traders will be closely watching U.S. Consumer Price Index (CPI) inflation data for September due later on Friday due to the data shortage caused by the government shutdown.
The headline and core CPI are expected to rise by 3.1% year-on-year in September. If the US inflation data comes in higher than expected, it could boost the US dollar (USD) and put pressure on dollar-denominated commodity prices in the short term.
The US government shutdown has entered its fourth week, with the Senate failing for the 11th time on Monday to pass a House-passed appropriations bill to fund the government and end the ongoing shutdown. The vote was 50 to 43, largely divided along party lines.
2. US President Donald Trump threatened to impose a 100% tariff on China last week, but softened his stance over the weekend, saying high tariffs on China were unsustainable and expressing his willingness to improve relations with China.
3. Trump predicted on Tuesday night that a "good deal" would be reached in his upcoming meeting with the Chinese president, but he also admitted that the highly anticipated talks might not happen.
4. U.S. Treasury Secretary Scott Besant will meet with Chinese officials to discuss reducing trade tensions before the U.S.-China trade negotiations.
5. Trump said on Tuesday night that he did not want to have a "meaningless meeting" with Russian President Putin about the war in Ukraine. According to the BBC, the planned face-to-face talks have been shelved.
6. According to the CME FedWatch tool, traders currently expect the probability of the U.S. central bank cutting interest rates again next week to be close to 99%, and another rate cut may be made in December.
Gold prices are trading in positive territory today. The precious metal's constructive outlook remains intact on the daily chart, with prices holding above the key 100-day exponential moving average. However, with the 14-day relative strength index (RSI) pointing toward its midline, suggesting neutral momentum in the short term, further consolidation or a temporary sell-off cannot be ruled out.
On the bullish side, a break above $4,140 (October 15 high) could pave the way for a further rise towards $4,330 (October 16 high). Further above that, the next resistance area is at $4,370 to $4,380, which is the all-time high and the upper Bollinger Band.
On the bearish side, the psychological level of $4,000 is a key support level. Further downside support appears at $3,947 (October 10 low), and the next point of contention is $3,838 (October 3 low).
(Spot gold 60-minute chart, source: Yihuitong)
At 14:35 Beijing time, spot gold was trading at $4147.25 per ounce.
Growing market expectations that the Federal Reserve will cut interest rates by another 25 basis points at its October policy meeting could push gold prices higher. Lower interest rates could reduce the opportunity cost of holding gold, supporting the non-yielding precious metal.
On the other hand, trade tensions between the United States and China appeared to be easing as the two sides plan to reach a deal before a November 1 tariff deadline. This could weaken safe-haven demand.
Looking ahead, traders will be closely watching U.S. Consumer Price Index (CPI) inflation data for September due later on Friday due to the data shortage caused by the government shutdown.
The headline and core CPI are expected to rise by 3.1% year-on-year in September. If the US inflation data comes in higher than expected, it could boost the US dollar (USD) and put pressure on dollar-denominated commodity prices in the short term.
Market Dynamics
The US government shutdown has entered its fourth week, with the Senate failing for the 11th time on Monday to pass a House-passed appropriations bill to fund the government and end the ongoing shutdown. The vote was 50 to 43, largely divided along party lines.
2. US President Donald Trump threatened to impose a 100% tariff on China last week, but softened his stance over the weekend, saying high tariffs on China were unsustainable and expressing his willingness to improve relations with China.
3. Trump predicted on Tuesday night that a "good deal" would be reached in his upcoming meeting with the Chinese president, but he also admitted that the highly anticipated talks might not happen.
4. U.S. Treasury Secretary Scott Besant will meet with Chinese officials to discuss reducing trade tensions before the U.S.-China trade negotiations.
5. Trump said on Tuesday night that he did not want to have a "meaningless meeting" with Russian President Putin about the war in Ukraine. According to the BBC, the planned face-to-face talks have been shelved.
6. According to the CME FedWatch tool, traders currently expect the probability of the U.S. central bank cutting interest rates again next week to be close to 99%, and another rate cut may be made in December.
Gold maintains a positive tone in the long term
Gold prices are trading in positive territory today. The precious metal's constructive outlook remains intact on the daily chart, with prices holding above the key 100-day exponential moving average. However, with the 14-day relative strength index (RSI) pointing toward its midline, suggesting neutral momentum in the short term, further consolidation or a temporary sell-off cannot be ruled out.
On the bullish side, a break above $4,140 (October 15 high) could pave the way for a further rise towards $4,330 (October 16 high). Further above that, the next resistance area is at $4,370 to $4,380, which is the all-time high and the upper Bollinger Band.
On the bearish side, the psychological level of $4,000 is a key support level. Further downside support appears at $3,947 (October 10 low), and the next point of contention is $3,838 (October 3 low).
(Spot gold 60-minute chart, source: Yihuitong)
At 14:35 Beijing time, spot gold was trading at $4147.25 per ounce.
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- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
