Gold Price Analysis: The Gold Price Is Vulnerable After Failing to Retain Its Monthly Opening Range

Talking Points About the Gold Price

Gold has recovered from a new monthly low ($1643) as it attempts to reverse the loss caused by the US Consumer Price Index (CPI) report, but it may struggle to continue the recovery from the yearly low ($1615) if it fails to defend the beginning range for October.

The gold price is vulnerable after failing to defend its monthly opening range.

Gold appears to be repeating August's price action, as it followed the negative slope in the 50-Day SMA ($1711), and the precious metal may continue to plummet in the coming days as Treasury rates surge to new yearly highs.

As the Federal Reserve maintains its current approach to combating inflation, expectations for higher US interest rates appear to be dragging on the price of gold, and bullion may face additional headwinds ahead of the next Fed interest rate decision on November 2 as it puts pressure on the Federal Open Market Committee (FOMC) to pursue a highly restrictive policy.

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Looking ahead, the CME FedWatch Tool presently predicts a greater than 90% chance of another 75bp rate hike amid sustained price rises in the US, and the FOMC may offer hawkish forward guidance for the remainder of the year as the central bank attempts to limit inflation.

As a result, gold may continue to track the negative slope in the 50-Day SMA ($1711) as it fights to stay above the moving average, and gold may abandon its rebound from the yearly low ($1615) if it fails to defend the starting range for October.

Gold is trading at a new monthly low ($1643) after failing to hold above the 50-Day Simple Moving Average ($1713), and the precious metal may continue to follow the moving average's downward slope, as it did in August.

The Fibonacci overlap at $1601 (38.2% expansion) to $1618 (50% retracement) is on the radar, with a break below $1584 (78.6% retracement) bringing the April 2020 low ($1568) into play.

However, failure to close below the $1648 (50% expansion) zone may result in gold price range-bound conditions, with a climb above the $1690 (61.8% retracement) to $1695 (61.8% expansion) area increasing the chance of another challenge of the moving average.