Gold price forecast: XAU holds $4,000 support amid Fed caution and trade truce

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Parshwa Turakhiya

31.10.2025

Gold price forecast: XAU holds $4,000 support amid Fed caution and trade truce — Gold stabilizes near $4,014 as central bank demand offsets Fed-driven dollar strength

Gold traded near $4,014 per ounce on Friday, stabilizing after a volatile week dominated by shifting Federal Reserve expectations and cautious optimism around the new U.S.-China trade truce. The metal remains on track for a second consecutive weekly loss as investors reduced bets on imminent rate cuts, yet strong central bank demand continues to underpin gold’s broader uptrend.

Highlights

- Gold trades near $4,014, holding above key support around the $4,000 level.

- Fed uncertainty and stronger dollar cap near-term upside for the metal.

- Central banks lifted Q3 purchases by 28%, offsetting ETF outflows.

Gold remains within a rising channel that has guided price action since early 2024. After failing to sustain above $4,200 earlier this month, the metal corrected toward the $3,950–$4,000 zone, where the 20-day exponential moving average ($4,024.81) and channel midline converge. This range now acts as a crucial support area for traders watching whether the long-term trend can hold.

Gold price dynamics (Source: TradingView)

A close below $3,980 could open the door to the 50-day EMA at $3,857.92, which previously triggered rebounds in April and August. Resistance remains firm at $4,140–$4,200, the upper band of the current channel and October’s high. A confirmed breakout above that range would reinstate bullish momentum toward $4,350–$4,400.

Momentum indicators show that gold’s correction is a pause rather than a reversal. The RSI hovers near 48, showing neutral conditions after the recent decline, while the Supertrend level at $4,314 signals resistance. Both the 100-day ($3,654.40) and 200-day ($3,382.12) EMAs continue to slope higher, preserving the long-term bullish structure.

Macro drivers: Fed tone and trade dynamics weigh on sentiment

Gold’s pullback follows comments from Fed Chair Jerome Powell, who emphasized that any policy easing would depend on incoming data. The remarks lowered expectations for a December rate cut, sending Treasury yields higher and strengthening the U.S. dollar — a combination that typically pressures non-yielding assets such as gold.

Meanwhile, the U.S.-China trade truce offered little immediate relief to safe-haven demand. The agreement’s focus on critical minerals and agricultural exports prevented escalation but left key trade issues unresolved. China’s promise to limit rare-earth output and increase soybean imports, coupled with reduced U.S. tariffs on fentanyl-related goods, improved sentiment modestly but not enough to drive a sustained rally.

Despite these headwinds, structural demand remains firm. The World Gold Council reported that central banks bought 220 tons in the third quarter, up 28% from the previous quarter. Kazakhstan led purchases, while Brazil returned to the gold market after a four-year absence. These inflows continue to counterbalance ETF outflows and a reduction in speculative futures positioning.

Market sentiment: Consolidation within an uptrend

The recent correction appears technical, reflecting profit-taking after a sharp rally rather than the start of a bearish phase. Speculative positioning on COMEX has eased slightly, with net longs still elevated compared to early 2024 averages. This suggests traders are reducing leverage, not abandoning bullish exposure.

Real yields remain stable, supporting gold’s valuation. Inflation expectations are steady, and the dollar’s strength, while limiting upside, has not triggered large-scale liquidation. Analysts note that dips toward $3,900–$3,950 continue to attract institutional demand, keeping downside risks contained.

Outlook: Range-bound before the next move

Gold is likely to remain within a $3,950–$4,200 range in the short term as traders await fresh inflation data and additional Fed guidance. A sustained move above $4,200 would confirm renewed momentum toward $4,400, while a break below $3,950 could extend the retracement toward $3,850.

The long-term story remains constructive. Central bank accumulation, geopolitical uncertainty, and ongoing diversification away from the U.S. dollar reinforce gold’s role as a defensive asset. The metal’s ability to hold the $4,000 zone underscores its resilience despite policy uncertainty.

Gold’s near-term narrative can be summarized as stability under pressure — supported by sovereign demand, restrained by Fed caution, and poised for renewed strength once macro clarity returns.

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