Beware of buying the bottom and turning into buying the house? Gold avalanches nearly 30%, foreign media reveals the key to the next step

Gold has underperformed recently. (Bloomberg)

[Financial Channel/Comprehensive Report] Is it time to buy gold? The international gold price has been under heavy selling pressure recently. The spot gold price fell from the year's intraday high of about US$5,595 per ounce to close at US$3,998 per ounce on October 23, a decrease of about 28.5%, falling below the US$4,000 mark. Foreign media quoted market experts as saying that there is still pressure in the short term. Next week's Federal Reserve decision and whether gold prices can hold key prices will be the focus of observation.

According to foreign media reports, Ole Hansen, head of commodity strategy at Saxo Bank, pointed out that after gold prices fell below US$4,065 per ounce, momentum traders sold, and they should pay attention to the support of US$3,970; to confirm that the correction has come to an end, gold prices must regain US$4,230. These two prices will become short-term observation indicators.

Why are gold prices under pressure? Market analysts believe that rising oil prices have raised concerns about inflation, a stronger U.S. dollar, and the possibility that the Federal Reserve may maintain a hawkish stance, all limiting the performance of gold prices. If the stock market falls further and investors sell assets to cover financing calls, gold may also be affected. However, experts believe that the recent decline does not mean that gold’s fundamentals have changed, and central bank buying may still provide support.

Next week's Federal Reserve interest rate decision will become the focus of the market. The market generally expects that interest rates will not be raised at this meeting, but officials' attitude towards subsequent policies may still affect the U.S. dollar, bond yields and gold prices. The United States will also release data such as the preliminary gross domestic product for the third quarter and the personal consumption expenditures price index (PCE), which will further affect the market's judgment on the direction of interest rates.

Analysts believe that gold prices may enter consolidation first in the short term, with U.S. dollar trends, inflation and geopolitical risks still being important variables. For investors who want to enter the market, in addition to observing whether the support of US$3,970 is held, they can also pay attention to whether the gold price can return to US$4,230. Before the selling pressure is clear, you must pay attention to the risks when chasing prices or rushing to buy the bottom.