Gold (XAU/USD) attracted renewed buying interest during Thursday’s Asian session, snapping a four-day losing streak. The US dollar (USD) struggled to sustain the previous day’s post-FOMC gains, retreating from a two-week high as investors grew concerned over the potential economic fallout from the ongoing US government shutdown. The weaker greenback, combined with lingering geopolitical uncertainty, helped lift demand for the safe-haven metal.
Investor sentiment also remained cautious following the high-profile meeting between US President Donald Trump and Chinese President Xi Jinping. A softer tone in global equities reflected this unease, further boosting gold’s appeal as a risk hedge. However, the Federal Reserve’s (Fed) hawkish tone could limit USD downside and cap upside potential for the non-yielding metal.
Gold benefits from safe-haven flows as the USD softens
The US government shutdown has now entered its fourth week, with Congress deadlocked over a Republican-backed funding proposal. Mounting economic concerns have pressured the USD, which slipped from its post-FOMC peak, prompting renewed demand for gold during Asian trading hours.
Following the Trump-Xi meeting, the US president announced that China will immediately resume soybean purchases and that rare earth disputes have been resolved. Despite the easing trade tensions, the Fed’s hawkish stance has tempered enthusiasm for fresh long positions in gold.
On Wednesday, the Fed delivered a widely expected 25-basis-point rate cut—its second this year—amid mixed views from policymakers. Governor Stephen Miran advocated a deeper cut, while Kansas City Fed President Jeffrey Schmid opposed any reduction, citing inflation concerns. The central bank also confirmed that it will end balance sheet reductions by December, marking the close of its quantitative tightening phase.
In his post-meeting remarks, Fed Chair Jerome Powell pushed back on expectations for another rate cut in December, noting that the committee must weigh risks to employment against the uncertainty of further policy moves. This cautious tone could keep USD bears in check, limiting strong upward momentum for gold.
Investors will now turn their attention to upcoming speeches from several FOMC members later in the North American session for additional clues on the Fed’s rate path. These insights will likely shape near-term USD direction and influence price action in the XAU/USD pair.
Gold faces resistance near $4,000 as technical signals turn mixed
Gold has struggled to hold above the 23.6% Fibonacci retracement level of its recent pullback from record highs, suggesting a lack of bullish conviction. Momentum indicators on the daily chart are turning negative, implying that rallies may still be viewed as selling opportunities near the $4,000 psychological barrier or the 23.6% Fibo level.
A sustained break above this zone could open the way toward the 100-hour Simple Moving Average (SMA) around $4,016, followed by resistance between $4,058 and $4,060, with further upside targets at $4,075 (38.2% Fibo) and $4,100.
On the downside, support is seen around the $3,950 area, followed by $3,917–3,916 and the key $3,900 handle. A decisive drop below $3,886—Tuesday’s three-week low—could accelerate losses toward $3,850–3,845 before exposing the $3,800 level. Further declines may extend toward the $3,765–3,760 region and the $3,700 zone if bearish momentum strengthens.
