OCBC’s FX strategists said gold is tentatively stabilising after a sharp sell-off, with the price back above USD4,000 as some dip-buying emerged. The move followed easing pressure from the USD and real yields, alongside slightly reduced expectations for Fed tightening, but the bank described the broader market structure as fragile and still tied to hawkish Fed pricing.
OCBC said rallies may fade while markets continue to price a meaningful risk of further Fed tightening, and argued a more durable rebound would require clearer declines in real yields, an unwind in Fed hike expectations, and stabilisation in ETF liquidation. Gold was last seen around 4028, with daily momentum mildly bearish as RSI declines slowed near oversold territory. It placed support at 3960 and 3820, the latter at the 76.4% fibo retracement from the Aug low to the 2026 high; resistance sits at 4100 and 4160, corresponding to the 61.8% fibo, and at 4280 near the 21 DMA.
Gold Finds Temporary Support Amid Shifting Yields
We’re seeing gold try to find its footing after that sharp sell-off, with some buyers stepping in now that the price is back above the $4,000 level. This temporary relief is coming from a slight pullback in the US dollar and real yields. For instance, the yield on 10-year inflation-protected Treasuries has eased back to 2.15%, giving the metal some breathing room.
However, we remain cautious because the broader setup is still fragile, and this is not a confirmed reversal. The Federal Reserve’s minutes from its meeting earlier this month reiterated a hawkish stance, emphasizing the need to keep policy restrictive until inflation is firmly under control. As long as markets are pricing in this “higher for longer” rate scenario, any rallies in gold are likely to be sold into.
Outlook for Trading Strategies and Key Risk Triggers
For the coming weeks, we see opportunities in selling call options or establishing bear call spreads as gold approaches resistance around $4,100 and then $4,160. This strategy aligns with our view that rallies will likely be short-lived until there is a clear change in Fed policy expectations. Historically, gold prices have remained suppressed in periods with elevated real yields, much like the environment in late 2023 before rate cut expectations began building.
On the other hand, selling puts around the $3,960 support level could be a way to collect premium, betting that the recent dip-buying will hold this floor. We must be careful with this approach, as data continues to show investor liquidation from gold ETFs, with global holdings falling by another 25 tonnes last month. This indicates a lack of strong institutional conviction in the metal right now.
Our entire thesis could change if we see real yields fall decisively below 2% or if upcoming economic data forces the market to price in rate cuts sooner. Until we see a sustained reversal in ETF outflows and a softer tone from Fed officials, we believe the path of least resistance is sideways to down. The key event to watch will be the next CPI inflation report in mid-July.
