Gold price (XAU/USD) dropped below $4,100 during early European trading on Friday, pressured by a rebound in the US dollar (USD) and cautious sentiment among investors following a steep sell-off earlier this week.
Analysts suggest that the conclusion of the Diwali festival in India — the world’s second-largest gold consumer — may reduce physical demand, adding to downside pressure on the precious metal.
However, lingering US government shutdown concerns and heightened global trade tensions could underpin safe-haven flows, potentially supporting gold prices. Expectations of upcoming US interest rate cuts may also provide a cushion, as lower rates tend to reduce the opportunity cost of holding non-yielding assets like gold.
All eyes on delayed US CPI inflation data
Market participants are closely monitoring the delayed release of the US Consumer Price Index (CPI) data for September, set to be published later on Friday.
Economists forecast headline CPI to rise 0.4% month-on-month, translating to a 3.1% annual rate. Excluding volatile food and energy prices, core CPI is expected to show a 0.3% monthly increase, maintaining a 3.1% year-on-year pace.
Market movers: gold slumps as traders await key data and trade talks
High-level trade negotiations between the United States and China are scheduled to begin in Malaysia later on Friday. China’s Vice Premier He Lifeng, US Treasury Secretary Scott Bessent, and Trade Representative Jamieson Greer will attend the talks.
Meanwhile, US President Donald Trump and Chinese President Xi Jinping are set to meet next Thursday on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit.
According to Reuters, the Trump administration is considering restrictions on a wide range of software-related exports to China in retaliation for Beijing’s recent curbs on rare earth exports.
In Washington, the US government shutdown has entered its 24th day, marking the second-longest funding lapse in history. The GOP-backed stopgap funding bill failed to pass in the Senate for a 12th consecutive time on Wednesday, with a 54–46 vote split largely along party lines.
Separately, President Trump imposed a fresh round of Ukraine-related sanctions on Russia, targeting oil giants Lukoil and Rosneft — the first such move in his second term.
A Reuters poll indicates that the Federal Reserve (Fed) is widely expected to cut interest rates by 25 basis points (bps) next week, followed by another reduction in December. The CME FedWatch Tool shows a 97% probability of a 25 bps cut at the upcoming meeting.
Technical outlook: gold maintains long-term bullish stance above key EMA
Despite near-term weakness, gold’s broader bullish structure remains intact, with prices holding above the 100-day Exponential Moving Average (EMA) on the daily chart. The 14-day Relative Strength Index (RSI) hovers above the neutral 50 level near 60.0, suggesting that upward momentum still dominates in the medium term.
On the upside, initial resistance is seen at $4,218, the high from October 15. A sustained break above this level could drive the XAU/USD pair toward $4,330 (October 16 high) and then to the upper boundary of the Bollinger Band at $4,365.
Conversely, the first line of support lies at $4,066 (October 23 low). A decisive drop below this level could expose the $4,000 psychological mark, followed by $3,947, the low from October 10, confirming a continuation of the bearish correction.
