Gold market analysis

"Gold Price Reversal Pattern Indicates Weakness" 18/9/2025 9:59 Completed 

The US Federal Reserve's FOMC cut interest rates by 25 basis points as expected after its meeting, lowering the federal funds rate to 4% to 4.25%. According to the latest forecast, FOMC members expect the median federal funds rate for this year to be 3.6%, lower than the 3.9% expected in June. This implies that rate cuts are likely at both the October and December meetings. Additionally, FOMC members raised their GDP growth forecast for this year from 1.4% to 1.6%, and increased their growth projections for the next two years by 0.1 percentage points to 1.8% and 1.9% respectively. However, the authorities maintained their forecast of 3.1% for core PCE inflation this year, but raised their inflation forecast for next year by 0.2 percentage points to 2.6%. Unemployment is expected to gradually decline, with the authorities maintaining their forecast of 4.5% for this year but lowering their unemployment rate projections for the next two years by 0.1 percentage points to 4.4% and 4.3% respectively. 

Interest rate cuts are all about managing risks. 

After the meeting, Federal Reserve Chair Powell said that the interest rate cut this time was mainly for risk management and there was no need for a rapid rate cut. The main consideration for the rate cut was the downside risk to the job market, and the revision of annual data meant that the labor market was no longer stable. Additionally, he believed that inflation was still high, but the impact of tariffs was short-lived. He also pointed out that the slowdown in consumer spending had led to a slowdown in economic growth, and the extent to which tariffs were passed on to consumers was smaller than expected. In response to the suggestion from the newly appointed governor, Michelle Bowman, to cut rates by 50 basis points, he said that the only way a single voting member could have an impact was by presenting a highly persuasive argument. 

Gold prices experienced significant fluctuations yesterday, with an overall trend of falling first and then rebounding. After rising to the day's high of $3,695.35 in the early Asian session, it repeatedly declined and reached a low of $3,660.55 in the mid-European session, which was the 270-degree vertical angle of the Gann Square. It then began to rebound and rose to $3,688.6 at the close of the London market. After that, it fluctuated around the $3,686 level. After the Federal Reserve announced the interest rate decision, gold prices rose to nearly $3,697, then fell below $3,650, and then rose sharply to a new high of $3,707.5. After that, it gradually declined, reaching a low of $3,646.26 before slowly recovering. In the early Asian session today, it approached $3,672, slightly rebounding to 38.2% of yesterday's maximum decline at $3,669.65, and then fell again. 

The gold price is currently in wave C. 

Technically, the gold price shows a strong bearish signal of a piercing pattern on the daily chart, suggesting a further decline in the near future. However, there is still considerable room for a rebound in the gold price. Moreover, the Federal Reserve is expected to cut interest rates twice more in the fourth quarter, providing a valid reason for the gold price to rise. Analyzing the hourly chart with the Elliott Wave Theory, the current gold price is in the c-wave, and its decline could be 1.382 or 1.618 times that of the a-wave, meaning the gold price could fall to $3,573.14. However, this would break through the starting point of the 1-wave, so based on this wave count, the gold price could fall to around but above $3,614.31. From the Gann Square perspective, the gold price has already broken through $3,660, and it is expected to fluctuate between $3,610 and $3,660 in the short term. 

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

MTF Special Analyst Zheng Guangfu