Gold market analysis

"Gold Price About to Enter a Major Correction Wave" 15/10/2025 9:53 Completed 

Yesterday, Federal Reserve Chair Powell spoke at the National Association for Business Economics' annual meeting, hinting that the authorities are close to pausing the balance sheet reduction. He said that there are signs that liquidity conditions are gradually tightening, including a general rise in repo rates and more pronounced temporary liquidity pressures at certain times. He emphasized that based on the experience since 2020, the authorities can use the balance sheet more flexibly in the future. He further stated that the measures to reduce the balance sheet in the coming months may be approaching an end and that the authorities remain committed to achieving a balance sheet that holds only Treasury securities over a longer period. 

The Federal Reserve is expected to end its balance sheet reduction program within the year. 

Moreover, he also mentioned that the current data indicates that there is a significant downside risk in the labor market, which justifies the rate cut in September. The "equilibrium level" of job creation is highly uncertain and may have dropped to a negative value. He also pointed out that the slow transmission risk of tariffs is beginning to manifest as persistent inflation. His remarks reflect that the risk of stagflation in the United States is increasing. However, since he stated that the authorities are likely to end the balance sheet reduction in the coming months (I believe it is within this year), even if the Federal Reserve does not "expand the balance sheet", it is inclined to maintain the current size of the balance sheet. 

Gold prices remain resilient. Despite a sharp drop of $89 within two hours at the opening of the European market yesterday, hitting a low of $4,090.67, they rebounded to $4,145.11 before encountering resistance again. It's worth noting that the price dropped once more but only reached a low of $4,098. Subsequently, it rose further. Technically, this not only forms a double bottom pattern but, according to wave theory, also represents a potential second wave. 

Three waves have reached the target, and there is significant resistance at 4210. 

Therefore, taking the basic increase of the third wave as 1.618 times that of the first wave, the target is $4,186.17. The high of $4,186.71 reached by gold in the early Asian session today is slightly above the above-mentioned target of the third wave. Therefore, it is inferred that gold will enter a short-term fourth wave correction, with a target close to but above $4,145.11, and then launch the fifth wave. Whether it can break through $4,186.71 or not, an abc correction wave will follow, with a target below $4,145.11. From the perspective of Gann's square, the current gold price has traded above the $4,160 to $4,210 range. If the gold price reaches or approaches $4,210, this level is at the 180-degree horizontal angle, presenting significant resistance. 

When the five waves of the Elliott Wave Theory are simultaneously fulfilled, the extent of the gold price adjustment will be greater. Coupled with the 9RSI on the hourly chart showing a top divergence, it is estimated that the gold price will at least test the support level of $4,100. If $4,090 is taken as the neckline of the double top, and assuming the gold price peaks at $4,210 and then falls, the measured decline target after breaking the neckline is $3,970. Especially, I judge that the short-term top of the gold price will occur today, and the gold price is about to face a new round of major adjustment wave! 

The above content is for reference only and does not constitute investment advice. 

MTF Special Analyst Zheng Guangfu