Gold climbed more than 2% to an intraday high near US$4,510 an ounce, as dovish signals from US Federal Reserve Governor Christopher Waller prompted markets to pare expectations for a September interest rate hike, according to OCBC.
The bank said the shift in rate expectations pulled US Treasury yields and the US dollar lower, providing support for the precious metal.
Gold was last quoted around US$4,474, recovering part of the sharp losses recorded earlier in the week.
OCBC said the rebound partly reversed the sell-off triggered by remarks from Federal Reserve Chair Kevin Warsh at Jackson Hole and a rise in global bond yields, which had weighed on non-yielding precious metals.
Despite the recent volatility, the bank maintained a constructive outlook on gold, although it cautioned that near-term price movements would remain highly sensitive to changes in market expectations surrounding the Fed’s policy trajectory.
“We remain constructive, although near-term direction is likely to stay highly sensitive to Fed repricing,” OCBC said.
Attention is now turning to the latest US payrolls report, which OCBC said could determine the next move in Treasury yields and the dollar.
A stronger-than-expected labour market reading could revive expectations for tighter monetary policy and push bond yields and the dollar higher, potentially creating renewed pressure on gold. Conversely, softer employment data could reinforce expectations that the Fed will remain on hold, providing further support to bullion.
Markets will subsequently focus on next week’s US consumer price index (CPI) and producer price index (PPI) releases.
OCBC said the inflation readings should be more decisive in determining whether the recent disinflation trend is sufficiently established for the Federal Reserve to keep interest rates unchanged.
Geopolitical tensions continue to offer some underlying support for gold because of its traditional safe-haven status, although OCBC cautioned that higher oil prices could have a more complicated impact on bullion.
Persistently elevated energy prices could revive inflation expectations, potentially pushing Treasury yields higher and complicating the outlook for US monetary policy. Higher yields generally make non-interest-bearing assets such as gold comparatively less attractive.
From a technical perspective, OCBC said mild bearish momentum remains intact on the daily chart, although the relative strength index has risen.
The bank sees two-way risks for gold but maintains a bias towards buying on dips.
Immediate resistance is seen at US$4,520 to US$4,530, an area corresponding with the 200-day moving average and the 23.6% Fibonacci retracement of gold’s 2026 low to its August high.
A decisive break above that zone could reopen the way for another attempt towards the US$4,700 level, OCBC said.
On the downside, initial support is seen at US$4,410, corresponding with the 38.2% Fibonacci retracement level, followed by the 100-day moving average around US$4,360.
With gold caught between easing rate-hike expectations and lingering inflation risks, OCBC expects incoming US economic data to remain the key driver of the precious metal’s next major move.
