During the National Day holiday, international gold prices generally showed a pattern of narrow-range fluctuation at low levels, with the center of gravity continuing to shift downward.

On October 1, gold prices briefly surged to $4,218.39 before rapidly plunging, with cumulative declines exceeding 10% since late August.

The core pressure came from the continuous surge in US Treasury yields.

The 10-year US Treasury yield climbed to 5.365% during the holiday period, hitting a new high since 2002, while the 30-year yield touched 5.732%.

Rising US Treasury yields directly increased the opportunity cost of holding non-yielding gold, while the US dollar index simultaneously rose to around 102.36, sitting at its highest level since April 2025.

Additionally, the release of the Federal Reserve's September meeting minutes constituted the direct trigger for the acceleration of gold's overnight decline.

The minutes showed that all 19 officials supported the September rate hike decision, with most officials still expecting possibly one more rate increase before year-end.

Although September nonfarm payrolls added only 29,000 jobs, far below the expected 90,000, which briefly caused the market to reduce bets on an October rate hike, the hawkish signals from the minutes quickly overshadowed the temporary boost from employment data.

While the probability of an October rate hike dropped to a low level, CME FedWatch showed that market pricing for a December rate hike remained above 50%.

However, downside support also genuinely exists.

The central bank disclosed on October 7 that gold reserves reached 77.47 million ounces at the end of September, an increase of 740,000 ounces month-over-month, marking the 23rd consecutive month of increases, with the pace of gold purchases in September further accelerating compared to August.

At the global central bank level, World Gold Council data showed that global central banks net purchased 39 tons of gold in August, pushing cumulative purchases for the year to 170 tons.

Persistent and accelerating official gold purchasing behavior may construct a medium-to-long-term bottom for gold prices that is difficult to breach by short-term interest rate fluctuations.

Comprehensively viewed, the significant weakening of nonfarm payrolls suppressed the short-term downside space for precious metals, but elevated long-end rates and a strong dollar still constitute valuation constraints.

The key focus for precious metals in October lies in whether employment weakness can force the Federal Reserve to abandon further rate hikes in December, and whether inflation can maintain its downward trend against the backdrop of high energy prices.

Source: Wind, Everbright Futures Research Institute

Author: Shi Yueming

Practitioner Qualification: F03097365

Trading Advisory Qualification: Z0017563

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