Gold price forecast: XAU slips to $4,260 after record highs amid profit taking ahead of Fed decision

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Gold slips to $4,260

Highlights

- Gold drops 2% to $4,260 after touching new highs.

- Fed rate cut expectations and geopolitical tensions keep long-term outlook bullish.

- Key support seen at $4,040 and $3,800, with resistance near $4,375.

Despite the pullback, gold remains up more than 60% this year, cementing its position as one of the best-performing assets amid global uncertainty and expectations of extended monetary easing.

Profit-taking triggers technical correction

From a technical standpoint, gold’s broader uptrend remains firmly intact, supported by consistent higher lows and strong demand throughout the year. The recent pullback comes after a parabolic rise that had pushed the metal deep into overbought territory. Prices are still comfortably above the 20-day exponential moving average at $4,043, which now acts as immediate support alongside the rising trendline. A deeper correction could extend toward $3,800, near the 50-day EMA, where buyers are expected to step back in.

Gold price dynamics (Source: TradingView)

The Relative Strength Index, which climbed above 80 last week, has cooled to around 70 following Tuesday’s dip. This moderation signals that the market is undergoing a healthy consolidation phase rather than a full-scale reversal. As long as prices remain above the $4,000 mark, the bullish structure remains intact.

The Bollinger Bands also point to a normalization of volatility after weeks of intense buying. A sustained move above $4,375 would reestablish upward momentum, potentially setting the stage for another advance toward $4,500. Conversely, a break below $4,040 could open the door to a short-term pullback while preserving the broader uptrend.

Macro backdrop supports long-term strength

On the macro front, traders are watching a series of geopolitical and policy developments that could influence gold’s next move. The upcoming meeting between U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng in Malaysia is being closely watched ahead of the Trump-Xi summit later this month. While optimism over a potential trade deal has steadied global markets, persistent geopolitical tensions and the ongoing U.S. government shutdown continue to bolster safe-haven demand.

Monetary policy expectations remain a key driver. The Federal Reserve is widely anticipated to cut interest rates by 25 basis points at its upcoming meeting, with another reduction likely before year-end. Lower yields and a weaker dollar outlook are typically supportive for gold, reinforcing the structural foundations of its rally.

Investor appetite for hard assets remains robust, with sustained ETF inflows and central bank accumulation highlighting confidence in gold as a hedge against economic uncertainty and currency debasement. Even with short-term corrections, the metal’s multi-month uptrend reflects a market positioning for prolonged policy easing and slower global growth.

Outlook

As discussed in earlier analysis, gold’s record-breaking run has been fueled by a confluence of safe-haven demand, dovish central bank policy, and capital rotation out of risk assets. The latest correction appears to be a pause within this broader bullish framework rather than the start of a reversal.

Traders will be watching whether gold can stabilize above $4,040 in the coming sessions. Holding that level would likely pave the way for another move toward $4,375–$4,400, while a decisive breakout could open the door to $4,500. Unless the metal falls below $4,000, the long-term narrative of strength underpinned by global uncertainty and accommodative policy remains intact.

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