Gold is trading near its lowest level since August, even after a weak US labour report that would typically support the metal. September Nonfarm Payrolls rose by 29K versus expectations of about 90K, while unemployment ticked up to 4.2% and annual wage growth slowed to 3%, alongside downward revisions to prior gains. The data helped push back expectations of an October Federal Reserve rate rise, but longer-dated US Treasury yields stayed close to multi-decade highs and the US Dollar remained firm, muting any follow-through and keeping gold’s opportunity-cost headwinds in place.
Positioning shows cross-currents rather than a broad exit. Speculative traders have cut long exposure while adding shorts for three consecutive weeks, and systematic Commodity Trading Advisors remain bearish, with further short covering linked to a move above $4,300/oz. Gold is holding above $4,100—around $4,110—despite trading below its 50-day, 100-day and 200-day simple moving averages near $4,332, $4,267 and $4,531. Technically, a break under $4,100 could open $4,000 and then $3,960–$3,940, while support from discretionary buyers, ETF demand and central banks sits behind a market that is weak but not capitulating. Central banks added 1,136 tonnes worth about $70 billion in 2022.
Market Caution And Technical Levels
We must approach the gold market with heightened caution in the coming weeks as the precious metal hovers around the critical $4,110 mark. Despite a weak US employment report showing payrolls rising by just 29,000, gold failed to rally because long-term bond yields, such as the US 10-year Treasury yield remaining sticky near 4.3%, continue to support a strong dollar. This tells us that trading solely on central bank rate expectations is no longer enough; we must wait for long-end yields to fall sustainably before establishing aggressive bullish positions.
In the short term, we should watch the key support zone between $4,100 and $3,940 very closely. If gold breaks below $4,100, it is highly likely that systematic trend-followers will increase their short positions, potentially dragging the price down to the summer lows. We can look to use tightly managed short contracts in this scenario, keeping in mind that major sell-offs have historically accelerated once key support levels give way.
Strategic Opportunities And Physical Demand
Conversely, we should avoid chasing any minor intraday rallies unless the price convincingly clears the $4,300 resistance level. Market positioning data indicates that systematic Commodity Trading Advisors are currently holding short positions but will be forced to cover them if we cross this price threshold. A breakout above $4,300 could trigger a rapid short squeeze, giving us a highly favorable environment to enter long momentum trades.
We also need to keep an eye on long-term physical demand, which is currently acting as a powerful buffer against deeper price declines. Recent reports from the World Gold Council highlight that central banks and exchange-traded funds continue to accumulate gold, absorbing a significant portion of the speculative selling. This underlying demand suggests we should look for buying opportunities near the $4,000 level if the current correction starts to exhaust itself.
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