Gold (XAU/USD) retreated slightly on Tuesday as profit-taking set in around the $4,150 area, with the metal losing momentum after Monday’s sharp rally. At the time of writing, XAU/USD is trading near $4,107, easing from a three-week high hit earlier in the European session.
Sentiment steady as Fed outlook supports dips
While dovish Federal Reserve (Fed) expectations continue to provide a supportive backdrop for precious metals, the latest pullback reflects a round of profit-taking as optimism grows that the record-long United States (US) government shutdown may soon end—dampening near-term safe-haven demand.
Progress toward reopening the government has improved market sentiment, though investors remain cautious about the underlying fiscal and economic headwinds that persist beyond the current funding deal. As key economic data releases resume following the shutdown, confirmation of further weakness in the US economy could bolster the case for additional monetary easing, reinforcing gold’s medium-term appeal.
US funding breakthrough and China headlines drive volatility
Fresh developments in Washington have been a major driver of recent price action. The US Senate voted 60–40 on Monday to end the historic shutdown that began on October 1, following a bipartisan agreement reached over the weekend.
The bill now heads to the House of Representatives for final approval before being sent to President Donald Trump for signature. The temporary measure will fund government operations through January 30, leaving open the risk of renewed fiscal uncertainty early next year.
Meanwhile, the US Dollar Index (DXY) continues to weaken, hovering near 99.30—its lowest level in two weeks—as traders price in greater odds of Fed rate cuts after weak ADP data showed the US lost an average of 11,250 private-sector jobs in the four weeks ending October 25.
In China, mixed trade signals have also influenced sentiment. Beijing announced plans to expand market access for US firms and temporarily remove certain port fees on American-operated vessels, while reports suggest that China is considering export restrictions on rare-earth magnets for US defense-linked companies.
technical outlook: consolidation after bullish breakout
Gold’s recent breakout above its two-week range between $3,900 and $4,050 has reinforced a bullish structure. Immediate resistance sits near $4,150; a decisive close above this level could extend the rally toward $4,200 and potentially the all-time high around $4,381.
On the downside, initial support lies at $4,100, followed by stronger support near $4,050, where the 100-period Simple Moving Average (SMA) also converges.
The Relative Strength Index (RSI) near 72 signals overbought conditions, suggesting that a brief consolidation or shallow correction could precede the next leg higher. Overall, gold’s near-term outlook remains constructive, with buyers expected to stay active on dips.
