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Gold prices ended the U.S. day session near unchanged to slightly lower Wednesday, on some mild follow-through pressure from the strong losses absorbed Tuesday. Prices hit a 3.5-month low again today. Near-term technical damage has been inflicted to suggest prices will continue to drift sideways to lower for at least the near term. December Comex gold was last down $0.10 an ounce at $1,270.00. December Comex silver was last up $0.05 at $17.79 an ounce.

"Gold prices slumped as strong U.S. data and hawkish U.S.Fed comments spurred expectations for a December Fed rate hike," said UBS Wealth Management Research in a report, adding that it has lowered its three-month estimate to $1,225 to $1,375 from $1,275 to $1,425.

"We lower our three-month trading range by $50/oz because a December hike is still not fully priced, and a solid U.S. payrolls number on 7October could prompt further profit-taking by a similar magnitude."

Credit Suisse remains constructive on gold even after the steep decline in prices Tuesday. The bank blamed the weakness on U.S. dollar gains, news of an earlier-than-expected planned exit by the U.K. from the European Union, reports that the European Central Bank may taper quantitative easing, and stop-loss selling as gold fell below $1,300 an ounce. “As we noted in our last precious-metals outlook, we continue to view the macro backdrop for gold demand as constructive,” Credit Suisse says. In particular, analysts say they expect gold-investment demand to be supported by negative “real” rates in the U.S. and globally across much of the yield curve. They also look for macroeconomic uncertainty to support physical gold buying, with potential for a set Brexit timeline to spur additional physical buying in Europe during the fourth quarter. Also, Credit Suisse's fixed-income team continues to forecast no Fed rate hikes until May 2017, lower than the probability factored in by the Federal funds futures. Credit Suisse also says valuations are more attractive for gold equities after the decline from the August peak.

MKS (Switzerland) S.A. describes gold sharp tumble on Tuesday as “overdone” and looks for a bounce in prices. Gold lost more than 3%, with MKS noting that an initial decline escalated when waves of sell stops were triggered as the market fell through chart support. “Following the overnight price action, we saw a modest recovery to the precious complex during Asian trade today, tempered somewhat by the lack of physical interest as a result of the Chinese Golden Week holiday,” says Sam Laughlin, precious-metals trader. “Tuesday's collapse in New York, on what really was minimal news out of the ECB (European Central Bank) and the Federal Reserve, looks to be well overdone and we expect gold to recover over the coming days and head back toward $1,300. Support for the yellow metal sits initially at $1,258 (200-day moving average) and below this $1,250.”