UBS has released a report noting that persistent inflation concerns have revived expectations that the Federal Reserve will tighten policy further, with gold prices falling about 5% since early September.

The bank believes that if gold clearly breaks below $4,000 per ounce, it would signal that the correction could deepen further; if it can sustainably rise above $4,280–$4,320 per ounce, it would represent a significant improvement in technical momentum and reinforce the view that the recent decline is merely a pullback within a broader uptrend.

During the gold price decline, the U.S. 10-year Treasury yield rose from around 4.8% to above 5.3%, the dollar index climbed from about 100 to above 102, and gold fell from above $4,400 per ounce to around $4,140. This move echoes the hawkish repricing that occurred after Warsh's speech at the Jackson Hole symposium in late August.

Resilient economic growth and labor market conditions have challenged expectations for continued easing, raising the market's view that another rate hike before year-end is increasingly likely, which has weighed on gold prices.

The bank believes that most of the impact from the recent hawkish repricing is now reflected in gold prices, initially signaling a more favorable entry point. After this round of adjustment, gold is consolidating around $4,140–$4,200 per ounce, and weaker labor market data released at month-end along with eased market expectations for a Fed rate hike in October suggest that monetary policy headwinds may be starting to fade.

This is not sufficient to confirm that a solid bottom has formed, but it supports the bank's judgment that the risk balance is becoming less negative. From a technical perspective, UBS considers $3,990–$4,030 per ounce to be the key near-term support range. Although gold prices remain below their short-term moving averages, most of the impact from the recent hawkish repricing appears to have already been priced in.