Gold: Two-Way Risks Near Recent Lows – OCBC

Gold is currently trading near $3,996.98, remaining in its recent low territory. OCBC analysts Sim Moh Siong and Christopher Wong believe that despite a pullback in oil prices, gold's rebound attempts remain tentative, with broader market deleveraging pressures still capping the metal's performance. However, cleaner positioning structures and resilience in gold ETF holdings provide a foundation for a potential recovery. Still, signals of elevated downside hedging costs indicate that overall market sentiment remains defensive, with two-way risks for both longs and shorts around current levels.

**Technical Outlook: Downside Momentum Overstretched, Key Resistance Needs Recapturing**

OCBC emphasizes that from a technical standpoint, gold's downside momentum appears overstretched, creating conditions for short-term stabilization or a rebound. However, to restore market confidence, gold needs to reclaim higher resistance levels. According to its earlier technical analysis, daily momentum is slightly bullish, with the Relative Strength Index (RSI) having risen to near overbought levels. Upside resistance is seen at $4,333 (23.6% Fibonacci retracement of the 2026 high-to-low range) and $4,393 (100-day moving average), while downside support lies at $4,160 (50-day MA) and $4,077 (21-day MA). Current prices hold some distance from both support and resistance, leaving significant two-way volatility risk.

**Macro Backdrop: Real Yields and Dollar Pose Short-Term Headwinds**

OCBC has sharply cut its end-2026 gold forecast in a recent report, primarily due to an acute repricing of real interest rates, a resurgent U.S. dollar, and a shift in market expectations toward a more hawkish Fed policy—factors that collectively undermine gold's appeal as a non-yielding asset. The bank draws parallels between the current macro environment and the 2013 "taper tantrum," warning that gold still faces considerable short-term downside risks amid elevated real yields and slowing ETF inflows. However, it also notes that structural factors—including central bank diversification, geopolitical uncertainty, and fiscal concerns—continue to underpin gold's medium-term outlook.

**Key Watch: Nonfarm Payrolls Could Serve as Short-Term Catalyst**

OCBC analysts note that the upcoming U.S. nonfarm payrolls report could be a key variable influencing yields, dollar movement, and whether gold's rebound can extend. Weak data could weigh on the dollar and yields, helping gold break out of its recent range; conversely, strong data could reinforce hawkish expectations and pressure prices again. With positioning and sentiment in a sensitive state, any surprise in macro data could amplify gold's two-way volatility.