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Gold price collapsed on Tuesday, falling around 6% in the biggest daily drop since 2020, after hitting a series of new record highs in past few sessions.

Correction was not a surprise as daily studies were strongly overbought for some time and the price was capped just under new record high in past few sessions, pointing to corrective action.

Most market observers expected limited action which would be just positioning for fresh push higher, as none of key factors that have driven gold price sharply higher, haven’t registered any significant change.

Solid supports at $4200/$4160 (psychological / daily Tenkan-sen) were expected to hold dips and keep larger bulls intact, however, violation of these supports sparked stronger sell-off, sidelining initial and ideal correction scenario.

Extended dips found firm ground at $4100 so far, with today’s close above this level, to bring some optimism.

On the other hand, large bearish daily candle is expected to weigh, with daily indicators in steep descend but with plenty of space at the downside, suggesting that correction might not be over.

Loss of $4100 handle would expose the breakpoint at $4000 and risk deeper correction if this support is broken.

Alternatively, ability to hold above $4100 would revive some optimism, but lift and sustained break of $4200 barrier will be needed to sideline bears.

Res: 4160; 4200; 4186; 4219
Sup: 4100; 4059; 4000; 3947

Gold: ⬇️ Sell

• Gold reversed from key resistance level 4370.00
• Likely to fall to support level 4000.00

Gold falling strongly after the price made 3rd failed attempt to break above the key resistance level 4370.00 standing well above the upper daily Bollinger Band.

The downward reversal from the resistance level 4370.00 will form the daily Japanese candlesticks reversal pattern Bearish Engulfing – strong sell signal for Gold.

Given the abnormally long period of overbought daily Stochastic, Gold can be expected to fall to the next round support level 4000.00.

USDCHF: ⬆️ Buy

• USDCHF reversed from support area
•  Likely to rise to resistance level 0.8050

USDCHF currency pair recently reversed from the support area between the powerful multi-month support level 0.7900 (which has been reversing the price from June) and the lower daily Bollinger Band.

The upward reversal from this support zone created the daily Japanese candlesticks reversal pattern Hammer – strong buy signal for this currency pair.

Given the strength of the support level 0.7900, USDCHF currency pair can be expected to rise to the next resistance level 0.8050 (top of the previous correction ii).

Markets

Q3 corporate earnings helped risk sentiment recover from recent hiccups related to the US-Sino trade war, French politics and US (regional) banks (credit-losses linked to fraud-related corporate defaults). And although the rally fizzled compared with yesterday, the EuroStoxx 50 still manages a new step into uncharted territory, taking on the 5700 level for the first time ever. As of last Friday, 86% of companies overshot earnings estimates and nearly 20% of US S&P 500 companies are scheduled to give updates this week. Today, we already retain positive earnings from blue ship companies like 3M, General Motors, Coca Cola, Halliburton and Phillip Morris International with Netflix still reporting after the close. Earnings updates so far don’t align with the overall pessimistic economic sentiment in place related to the aftermath of US tariffs. Or to flip it around: corporate updates suggest that previous economic (doom) scenarios might have been too negative. Bullish equity markets contrast with the more guarded signal coming from (core) bond markets. US yields face difficulties to get away from key support levels across the curve, stretching from 3.43 for the 2-yr over to 4% for the 10-yr to 4.6% for the 30-yr. EU bond yields are in the same way stuck around lowest levels since the start of the summer, especially at the longer end of the curve. Friday’s global PMI surveys (October) are a good barometer for the contrasting stock/bond point of view. The US dollar is better bid today, but gains remain technically insignificant. The trade weighted dollar rises from 98.60 to 98.90 with EUR/USD slipping from 1.1642 to 1.1602. The Japanese yen underperforms (USD/JPY 151.90 from 150.75) on a combination of LDP Takaichi becoming PM and rumours that the BoJ sees no urgency to implement another rate hike at the end of this month. The market implied probability of a move from 0.50% to 0.75% fell from 25% to 2.5%. Assets that recently flourished like the Swiss franc or some commodities (gold/silver) ran out of steam today. EUR/CHF bounced off the low 0.92 support area with prices of those two precious metals falling by over 3% and over 5% respectively. In Central-Europe, EUR/HUF holds below the 390-handle after the central bank kept its policy rate unchanged at 6.5%. They kept to the message that tight monetary conditions are warranted given the necessity of anchoring inflation expectations. The path forward is careful and patient. MNB governor Varga is committed to keep making independent monetary decisions. That’s a strong message to the Hungarian government after PM Orban, at risk of losing parliamentary elections next year, applied pressure on the central bank earlier this month to pursuit a more growth-supportive policy.

News & Views

The head of Sweden’s central bank is urging policymakers to quickly return to budgetary discipline and return to its fiscal framework. Sweden’s political parties agreed to temporarily suspend strict spending rules so that they can honor their obligations after having joined NATO in 2024. The country committed to spend 3.5% of GDP on defense and a further 1.5% on civil defense with both being excluded from the normal budget. Riksbank governor Thedeen said it’s not a problem right now – Sweden has a low debt ratio of around 33% - but he sees the lack of a clear plan to return to orthodoxy as a warning signal. The political parties across the spectrum have earmarked 2035 to return to balanced public finances but kept out the details on how to do so.

Canadian inflation unexpectedly rose by 0.1% m/m last month, pushing the yearly reading from 1.9% to 2.4% (2.2% expected). Underlying gauges (median, trimmed mean) accelerated as well and more than analysts had penciled in. The main contributors were grocery prices, which rose 4% y/y, and shelter costs, up 2.6%. Gasoline prices, though still down 4.1% annually, declined less sharply than in August (-12.7%) due to base effects: price fell 7.1% m/m in September 2024 vs +1.9% in 2025. Travel tour prices also fell less than in previous months. The numbers complicate matters for the Bank of Canada. Its quarterly survey published yesterday virtually gave an all clear for another rate cut (to 2.25%) at the October 29 meeting with lingering trade tensions and tariffs reported to weigh on sentiment and activity. Markets scale back the implied probability from 75% to 65% currently, lifting front end yields by a couple of basis points. USD/CAD eases marginally towards the 1.40 barrier.

Headline CPI inflation for September came in at 2.4% year-on-year (y/y), ahead of expectations for a 2.2% y/y print. September's reading was up from 1.9% in August.

Gasoline prices again provided a smaller drag to the headline, down 4.1% y/y from -12.7% last month. On a monthly basis, prices rose 1.9%, with refinery disruptions and maintenance in North America cited as factors.

A monthly rise in travel services prices in September, rather than the typical decline, flipped the annual price change to +1.3% y/y from -9.3% y/y in August.

Measures of underlying inflation were a mixed bag, either ticking higher or remaining unchanged in September. The Bank of Canada's (BoC) CPI-trim measure rose to 3.1% y/y (3.0% in August), while the CPI-median index was unchanged at 3.2% y/y. The CPI excluding food and energy was unchanged at 2.4% y/y and the CPI excluding the eight most volatile components and indirect taxes (CPIX) rose to 2.8% y/y from 2.6% in August. On a three-month annualized, seasonally adjusted basis the CPIX (+2.3%), CPI ex. food and energy (1.6%) and CPI-median (+2.8%) were all unchanged in September, while the CPI-trim rose to 2.6% from 2.4% in August.

Key Implications

Underlying inflation appears to have firmed up in the past two months, but it remains within the Bank of Canada's target range. One hotter-than-expected month does not a new trend make, but it is worth monitoring whether the strength in price pressures is indicative of ongoing consumer resilience.

The Bank of Canada should still have room to deliver another cut. The economic outlook is fraught with risks, and the elevated unemployment rate reflects an economy with ample slack – something yesterday's Business Outlook Survey reinforced. Markets seem to agree, pricing the odds for an October cut at 69%, just a smidge lower than the 77% pre-release.

Daily Pivots: (S1) 150.29; (P) 150.75; (R1) 151.21; More...

Intraday bias in USD/JPY remains on the upside at this point. Rise from 139.87 is likely resuming. Firm break of 100% projection of 142.66 to 150.90 from 145.47 at 153.71 would prompt upside acceleration to 161.8% projection at 158.80. On the downside, however, below 149.37 will target 55 D EMA (now at 148.78) instead.

In the bigger picture, current development suggests that corrective pattern from 161.94 (2024 high) has completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94 high. On the downside, break of 145.47 support will dampen this bullish view and extend the corrective pattern with another falling leg.

Daily Pivots: (S1) 0.7907; (P) 0.7925; (R1) 0.7945; More…

USD/CHF's recovery from 0.7872 extends higher today, but stays below 0.7984 minor resistance. Intraday bias remains neutral and further decline is in favor. On the downside, below 0.7872 will bring retest of 0.7828. Firm break there will resume larger down trend. However, break of 0.7984 will suggest that corrective pattern from 0.7828 is extending with another rising leg, and target 0.8075 again.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8332 support turned resistance holds (2023 low).

Daily Pivots: (S1) 1.3389; (P) 1.3416; (R1) 1.3432; More...

Intraday bias in GBP/USD remains neutral. Another fall is mildly in favor as long as 1.3526 resistance holds. Break of 1.3247 will target 1.3140 cluster (38.2% retracement of 1.2099 to 1.3787 at 1.3142). Strong support is expected there to contain downside to complete the corrective pattern from 1.3787. On the upside, break of 1.3526 will target 1.3725/87 resistance zone.

In the bigger picture, rise from 1.0351 (2022 low) is still seen as a corrective move. Further rally could be seen to 61.8% projection of 1.0351 to 1.3433 (2024 high) from 1.2099 (2025 low) at 1.4004. But strong resistance could emerge from 1.4248 (2021 high) to limit upside. Sustained break of 55 W EMA (now at 1.3191) will argue that a medium term top has already formed and bring deeper fall back to 1.2099.

Daily Pivots: (S1) 1.1629; (P) 1.1652; (R1) 1.1666; More…

Intraday bias in EUR/USD remains neutral and fall from 1.1917 is expected to resume sooner or later. Break of 1.1540 will target 1.1390 support, or even further to 38.2% retracement of 1.0176 to 1.1917 at 1.1252. On the upside, through, break of 1.1778 will target retest of 1.1917 high instead.

In the bigger picture, considering bearish divergence condition in D MACD, a medium term top is likely in place at 1.1917, just ahead of 1.2 key psychological level. As long as 55 W EMA (now at 1.1290) holds, the up trend from 0.9534 (2022 low) is still expected to continue. Decisive break of 1.2000 will carry larger bullish implications. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep outlook bearish.