At a Glance
- Gold (XAU/USD) is showing signs of stabilization after a significant selloff, finding some support as the US Dollar weakens.
- The market is closely watching upcoming US-China trade talks and the ongoing US government shutdown for potential catalysts.
- Technical analysis suggests a near-term bearish bias for XAU/USD following a double-top breakdown, with key support around $4,000.
- Persistent geopolitical and economic uncertainties, along with expectations of a dovish Federal Reserve, continue to support long-term safe-haven demand for gold.
Gold Stabilizes Amidst Shifting Market Sentiment
Gold (XAU/USD) is attempting to stabilize on Wednesday following a significant selloff from record highs the previous day. The precious metal is finding some support as the US Dollar (USD) softens. At the time of writing, XAU/USD is trading around $4,040, down over 1.50% after briefly dipping to $4,004 earlier in the day.
💡 Bargain hunters are stepping in near the $4,000 psychological mark, but the rebound so far remains shallow. The yellow metal experienced its most substantial one-day decline since August 2020 on Tuesday, plunging over 5%. This correction occurred as investors sought to lock in profits after an extended rally to $4,380. Momentum indicators had previously signaled exhaustion, suggesting the decline was anticipated.
⚡ Investor optimism that a renewed escalation in US-China tariffs can be avoided, with high-level trade talks scheduled later this week, has somewhat curbed safe-haven demand for gold.
Market Movers: Key Factors Influencing Gold Prices
In the near term, Gold’s bias appears mildly bearish as markets continue to digest Tuesday’s sharp correction. However, the broader outlook remains constructive. The metal could regain traction if trade tensions flare up or if risk sentiment deteriorates.
📍 Downside risks are likely limited by expectations of a dovish Federal Reserve (Fed) stance, the prolonged United States (US) government shutdown, and persistent geopolitical and economic uncertainties that continue to underpin long-term demand for safe-haven assets.
Focus Remains on Trade Talks, Fed Policy, and Government Shutdown
US President Donald Trump indicated on Tuesday his expectation to meet with Chinese President Xi Jinping in South Korea, expressing hope for a good deal. However, his remarks later suggested the meeting might not happen, introducing uncertainty due to his shifting statements on trade. Earlier, he had proposed imposing 155% tariffs on Chinese imports effective November 1 if no agreement is reached.
📊 US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are scheduled to meet in Malaysia this week for high-level trade discussions aimed at easing tensions and preventing further tariff escalation. These talks are expected to address tariffs, rare-earth export controls, and agricultural trade commitments, preceding the current US-China tariff truce deadline on November 10. Analysts anticipate that both sides will seek another short-term extension or a limited truce to maintain negotiation momentum and avoid renewed escalation.
📍 The US government shutdown has now entered its twenty-second day, marking it as the second-longest in history. Negotiations between the White House and Congress remain deadlocked, with President Trump reiterating that Republicans will not be extorted.
⚡ On the geopolitical front, reports suggest that Europe and Ukraine are preparing a 12-point peace proposal intended to end the war with Russia. This plan reportedly includes a cease-fire along existing front lines, security guarantees for Ukraine, and conditional sanctions relief for Moscow.
📊 The US economic calendar is relatively light this week, with significant focus on Friday’s Consumer Price Index (CPI) and preliminary S&P Global Purchasing Managers’ Index (PMI) readings for October. Markets are pricing in a near certainty of a quarter-point rate cut at the October 29-30 monetary policy meeting, although the inflation data could still influence expectations regarding the Fed’s future policy path.
Technical Analysis: XAU/USD Under Pressure After Breakdown
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XAU/USD remains on the defensive, extending its sharp decline from recent record highs and confirming a near-term bearish structure on the 4-hour chart. The metal has clearly violated the neckline of a double-top pattern around $4,200, a move that reinforces the downside bias after buyers failed to defend this key support level.
📍 Immediate resistance is observed around the 100-period Simple Moving Average (SMA) near $4,063, followed by the 50-period SMA around $4,193. On the downside, a sustained close below $4,000 would expose the next support zone around $3,950. Any rebound above $4,150 could attract short-covering but is likely to encounter fresh supply pressure.
📊 The Relative Strength Index (RSI) remains weak, hovering near oversold territory around 31, indicating persistent bearish momentum. Unless the metal regains a foothold above the $4,200 neckline, the near-term outlook is likely to remain pressured, favoring further consolidation or mild downside extension.
Currencies Price Changes
The following table illustrates the percentage change of major currencies against each other for the current day. The US Dollar was strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.14% | 0.38% | -0.11% | 0.04% | 0.08% | 0.02% | 0.00% | |
| EUR | -0.14% | 0.24% | -0.26% | -0.10% | -0.06% | -0.09% | -0.13% | |
| GBP | -0.38% | -0.24% | -0.49% | -0.35% | -0.30% | -0.33% | -0.37% | |
| JPY | 0.11% | 0.26% | 0.49% | 0.14% | 0.20% | 0.15% | 0.13% | |
| CAD | -0.04% | 0.10% | 0.35% | -0.14% | 0.04% | 0.00% | -0.03% | |
| AUD | -0.08% | 0.06% | 0.30% | -0.20% | -0.04% | -0.03% | -0.07% | |
| NZD | -0.02% | 0.09% | 0.33% | -0.15% | -0.01% | 0.03% | -0.04% | |
| CHF | -0.01% | 0.13% | 0.37% | -0.13% | 0.03% | 0.07% | 0.04% |
The heat map displays percentage changes of major currencies against each other. The base currency is selected from the left column, and the quote currency is selected from the top row. For instance, selecting the US Dollar from the left column and moving horizontally to the Japanese Yen shows the percentage change for USD (base)/JPY (quote).
Main Insights
Gold is attempting to find a floor following a sharp decline driven by profit-taking, with the softening US Dollar offering some support. Market participants remain focused on the potential outcomes of US-China trade negotiations and the ongoing US government shutdown, factors that could reignite safe-haven demand for gold.