Gold prices continued to fall yesterday as the market continued to digest hawkish expectations from the Federal Reserve, coupled with rising real yields and a stronger dollar. The trigger for this decline was unexpectedly hawkish comments from Fed official Waller. He stated that he would vote to raise interest rates in December regardless of inflation data; and if subsequent inflation data exceeded expectations, he did not rule out the possibility of a 50 basis point rate hike. Subsequently, the US CPI inflation data indeed exceeded market expectations, further boosting market expectations for a 50 basis point rate hike, and the decline in gold prices widened further. After the CPI data release, Federal Reserve official Hammark also spoke, not ruling out the possibility of a larger rate hike. Currently, traders only predict a 12% probability of a 50 basis point rate hike, but if more Federal Reserve officials support this measure, or do not rule out this option, the probability of a rate hike will continue to rise. Meanwhile, US-Iran negotiations have reached a stalemate. The Wall Street Journal reported that US Vice President Vance is considering holding face-to-face talks with senior Iranian security officials in an attempt to end the current conflict. Other reports indicate that Iranian leaders believe the US plans further military strikes or impose increasingly severe economic pressure to force Iran to retaliate. Overall, there is a serious lack of trust between the two sides, which confirms that an agreement will not come as quickly as the market previously expected. Looking ahead: unless the Iranian war ends, the rate hike, coupled with increased market concerns about economic growth, is expected to put further downward pressure on the stock market and US long-term Treasury yields. This situation, however, may ultimately benefit gold. It's important to note that in the current environment, if Trump chooses to escalate the conflict further, inflation expectations will rise, while economic growth prospects will weaken, potentially leading to stagflation, which would be positive for gold. Conversely, if the situation eases and inflation concerns subside, the market will re-price dovish policies, providing short-term support for gold. Gold Technical Analysis – Daily Chart From the daily chart, spot gold prices have fallen back below the previously broken trendline and are currently targeting the support level of 3885. This level also coincides with a significant upward trendline, creating a confluence of support. Buying activity is expected to likely enter near this support level; stop-loss orders can be placed below this upward trendline, betting on a rebound to 4700. On the other hand, bears need to see a decisive break below this support before increasing their short positions, with the next target at 3500. Gold Technical Analysis – 4-Hour Chart On the 4-hour chart, after gold prices broke below the secondary support level of 4040 and the upward trend line, the selling pressure continued. Currently, a downward trend line is dominating the bearish momentum. If gold prices rebound, short sellers will likely use this downward trend line as a base to establish positions, with stop-loss orders placed above the trend line, continuing their downward trend towards the 3885 support level. On the other hand, bulls will only enter aggressively and push for new highs if gold prices break above this trend line. Gold Technical Analysis – 1-Hour Chart There isn't much new information on the 1-hour chart: for short sellers, placing orders near the downtrend line offers a better risk-reward ratio; while longs need to wait for gold prices to pull back to the 3885 support level, or break upwards through the downtrend line, before placing orders to bet on new highs. The red line in the chart represents today's average daily trading range (ADR). Upcoming market catalysts: The US initial jobless claims data is about to be released; tomorrow, the US PPI producer price index will conclude this week's economic data.