Gold price forecast: XAU slips below $4,000 as Fed pause and easing trade tensions weigh on sentiment

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Parshwa Turakhiya

03.11.2025

Gold price forecast: XAU slips below $4,000 as Fed pause and easing trade tensions weigh on sentiment — Gold consolidates near $4,000 as traders weigh Fed policy tone and easing trade tensions.

Gold traded near $4,004 per ounce on Monday, slipping below the $4,000 threshold for the first time this month as traders reassessed the outlook for U.S. monetary policy and scaled back safe-haven bets. The move extends a mild correction from October’s record highs, with investors now eyeing key technical levels to determine whether the metal’s long-term uptrend remains intact.

Highlights

- Gold dips below $4,000 amid reduced rate-cut expectations and easing geopolitical risk.

- Fed signals last rate cut for 2025 as market odds for December easing drop to 70%.

- Key support lies between $3,850–$4,000; holding this zone could trigger a rebound.

The pullback follows comments from Federal Reserve Chair Jerome Powell suggesting last week’s quarter-point rate cut might be the final adjustment for 2025. His measured tone, combined with limited economic visibility due to the ongoing U.S. government shutdown, prompted traders to reassess the Fed’s trajectory. Market-implied odds of another rate cut in December have fallen sharply, cooling speculative enthusiasm that previously propelled gold’s rise.

Adding to the softer tone, signs of progress in U.S.-China relations have eased geopolitical tensions. The agreement between Presidents Trump and Xi to extend their tariff truce and lift certain export restrictions helped reduce the immediate demand for safe-haven assets. Meanwhile, Beijing’s decision to remove tax incentives on domestic gold sales could weigh on Chinese retail demand, one of the key drivers behind gold’s record-setting rally in recent months.

Despite these headwinds, analysts note that gold’s broader fundamentals remain strong, supported by central bank purchases and persistent inflation concerns. The metal’s year-to-date gain of nearly 50% underscores its appeal as a strategic asset, even as short-term sentiment turns cautious.

Technical structure points to consolidation phase

The technical picture shows gold consolidating after its parabolic rally to $4,314 earlier in October. The metal now trades just above the 20-day exponential moving average at $4,021.87, with a dense cluster of support extending down to $3,860 — a zone defined by the 50-day and 100-day EMAs. This area represents the key battleground for bulls seeking to preserve the broader uptrend.

Gold price dynamics (Source: TradingView)

The daily chart highlights a clear ascending channel that has guided price action since early 2024. Gold now sits in the lower half of this range after failing to sustain its steep breakout leg. A close below $3,850 could expose deeper downside toward $3,660, though the longer-term bullish structure remains intact as long as the 200-day EMA at $3,388 continues to hold.

Momentum indicators support the idea of a pause rather than a reversal. The relative strength index has normalized from overbought readings near 80 to a neutral 54, suggesting conditions are resetting for potential accumulation. A breakout above $4,314 — the Supertrend indicator’s upper boundary — would confirm renewed bullish momentum and open the path toward $4,450–$4,500.

Outlook: Bulls cautious but structure remains intact

While near-term enthusiasm has cooled, the underlying drivers of gold’s long-term strength remain in place. A slowing U.S. economy, elevated debt levels, and sustained central bank diversification away from the dollar continue to underpin strategic demand for the metal. The key test for bulls in the coming sessions will be whether prices can hold above the $3,850–$4,000 range.

If this zone holds, gold could stabilize and regain traction toward $4,100 and $4,250, particularly if new economic data or Fed communication revives expectations of additional policy easing. Failure to defend $3,850, however, would represent the first meaningful technical breakdown since February and could trigger a deeper retracement before recovery resumes.

For now, gold’s rally appears to be pausing rather than reversing. The market is digesting its rapid gains, consolidating within a still-strong structural framework. As long as the 200-day support remains firm, the metal’s long-term narrative — supported by central banks and global macro uncertainty — continues to point toward eventual new highs once near-term pressure fades.

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