All of October, the metal has been trading in a $4,100-$4,200 corridor and for several sessions now it has been unable to consolidate above the upper boundary. Overnight, resistance around $4,175 did not hold - that is the 100-period moving average on the 4-hour chart. The nearest support after $4,100 is the monthly low of $4,066, then the October 14 low of $4,073 and the yearly low of $3,941.
The reason for the pressure is bets on a hawkish Fed. After hot inflation data last week, CME FedWatch (rate-futures probability estimate) gives more than 90% odds of a rate hike in December. For the October meeting, the market is pricing in only 14-17%: Fed officials themselves said they "are in no hurry to raise rates in October." Gold pays no interest, so expensive money is a direct negative for it.
The second layer is oil. On Tuesday, the commodity sharply reversed from a monthly high on hopes for US-Iran talks, but Iran's first vice president asserted sovereignty over the Strait of Hormuz, which brought back the risk of supply disruptions. Expensive oil = higher inflation = more reasons for a rate hike.
The dollar rebounded from a nearly three-week low, and that finished off gold: the decline continued even as US Treasury yields fell.
What's next: the two-day FOMC meeting starts on October 28, the press conference of Fed Chair Kevin Warsh is the same day, and the PCE price index (the Fed's favorite inflation gauge) is released on October 29. That same week, the RBNZ, the Bank of Canada, the ECB and the Bank of Japan decide on rates.
Four days of decline, and in money terms - pocket change?
Gold has been working the $4,100-$4,200 corridor for a second week now, and the boundaries are visible even without indicators. What stings is something else: a hundred points on a personal deposit is a dinner, not a month's result. It all comes down not to the chart markup, but to the notional you're allowed to risk. In prop trading, the trading account is allocated by the company: first you pass a challenge, then you work with its capital and its limits, without comparable capital of your own. There is still a week before the Fed meeting on October 28 to figure out the scheme.