Gold ended October 9 with strong gains and returned above $4,200 per ounce again. XAU/USD added more than 1.4% during the session and rose to about $4,207. The daily low was around $4,130, so the total range was almost $80 per ounce. By evening, the metal was trading around $4,194.
What became the main driver
The main reason for the rise was weak US consumer sentiment data. The University of Michigan preliminary index for October fell to 46.3. The market expected a reading of about 47.6, and a month earlier the figure was 48.1. The decline intensified concerns about the state of the American consumer and the overall dynamics of the economy.
What happened to inflation expectations
At the same time, Americans' inflation expectations continued to rise. One-year expectations rose from 4.6% to 4.7%. The five-year figure increased from 3.4% to 3.5%. This combination looks ambiguous: consumers are assessing the economy worse and worse, but at the same time expect higher inflation. For the Fed, this complicates the choice between supporting the economy and fighting rising prices.
Why gold received support
After the release, US Treasury yields declined. At the same time, the dollar weakened. For gold, these are two direct positive factors. The metal does not generate interest income, so lower bond yields reduce the advantage of interest-bearing assets. A weak dollar also makes gold cheaper for buyers using other currencies.
What is happening with the Fed rate
The current Fed rate range is 3.75-4.00%. The market estimates the probability of keeping the rate unchanged at the October meeting at about 81%. At the same time, Fed officials continue to remind that inflation remains elevated. Therefore, the market is not yet pricing in a sustained shift to a looser policy.
Where the nearest levels are
On the downside, the nearest support is around $4,150. The next important level - $4,100. On the upside, the key resistance remains the $4,260 area. A consolidation above this zone could bring the market back to discussing new highs.
What's next
Next week, the market will receive several important US releases at once. Attention will be on consumer inflation, producer prices, and retail sales data. New speeches from Fed officials are also expected. For gold, this means continued high sensitivity to the dollar, yields, and rate expectations.
Did you catch this $80 per ounce move?
The move from $4,130 to $4,207 shows how quickly gold can react to macroeconomic data. But the outcome of a trade depends not only on direction, but also on the available trading volume. In prop trading, a trader passes a challenge, confirms discipline, and gains access to the company's trading account without needing to use comparable personal capital. It is better to understand the mechanics in advance, before the next block of inflation data.