Gold (XAU/USD) continues its upward momentum on Tuesday, building on Monday’s breakout above the $4,100 level to reach a two-and-a-half-week high near $4,141–4,142 during the Asian session.
The precious metal has now advanced for the third consecutive day and gained in four of the past five sessions, supported by growing expectations that the US Federal Reserve (Fed) will deliver another rate cut in December and concerns over the economic fallout from the prolonged US government shutdown.
Fed rate cut bets and economic concerns support gold
Despite optimism surrounding the potential reopening of the US government, worries over the economic impact of the record-length shutdown continue to underpin safe-haven demand for gold.
A modest recovery in the US Dollar (USD) has done little to dent bullish sentiment, with traders largely focused on the Fed’s next policy move. According to the CME FedWatch tool, markets currently price in over a 60% probability of a December rate cut, keeping the non-yielding metal in demand.
Adding to the dovish outlook, the University of Michigan’s latest survey showed US consumer sentiment fell sharply to 50.3 in November—its lowest since June 2022—from 53.6 in October.
The data reinforced expectations of slower economic growth and increased pressure on the Fed to act. However, with US markets closed on Tuesday for Veterans Day, thin trading volumes may limit further upside ahead of speeches from key FOMC members later this week.
Technical outlook: bullish setup favors further upside
From a technical standpoint, XAU/USD has established firm support above the 50% Fibonacci retracement of its recent correction from October’s all-time high.
Positive momentum indicators on the daily chart confirm a near-term bullish bias. A sustained break above the $4,155–4,160 resistance zone would likely open the door for a move toward the next key target near $4,180–4,200, corresponding to the 61.8% Fibonacci retracement level.
On the downside, initial support lies around the Asian session low near $4,115, followed by the $4,100 round figure and the $4,075 area, which aligns with the 38.2% Fibonacci retracement.
A decisive break below these levels could trigger a deeper correction toward $4,025 and then the $4,000 psychological mark. Further weakness below this zone may shift the short-term outlook back in favor of sellers, exposing $3,935–$3,936 and potentially $3,900 as the next downside targets.
