Gold (XAU/USD) moved lower during Thursday’s Asian session, snapping a four-day rally that took prices to a new all-time high near the $4,059–4,060 zone on Wednesday. The Israel–Hamas agreement on the first phase of a peace deal eased geopolitical tensions and prompted profit-taking in the safe-haven metal amid overbought market conditions. Still, dovish expectations for the Federal Reserve’s (Fed) policy stance could continue to support the non-yielding asset and discourage aggressive bearish positioning.
Fed rate-cut expectations limit downside pressure
Markets are increasingly pricing in two additional Fed rate cuts before year-end. This outlook has prevented the US Dollar (USD) from sustaining its recent gains, pulling it away from the two-month high reached on Wednesday.
Additionally, concerns over a prolonged US government shutdown and its potential impact on economic activity add to the cautious sentiment, making traders hesitant to confirm a top in gold without clear follow-through selling. Investors now await comments from Fed Chair Jerome Powell for fresh policy cues.
Market movers: geopolitical relief triggers profit-taking
US President Donald Trump announced on Wednesday that Israel and Hamas had agreed to the first phase of his 20-point Gaza peace plan following talks in Egypt. The development triggered profit-taking among bullish traders, weighing on gold during Thursday’s Asian session.
Minutes from the Fed’s September meeting revealed near consensus among policymakers to lower rates due to labor market concerns, though members remained divided over the number of additional cuts required this year. According to the CME FedWatch tool, the probability of a 25-basis-point cut in October and December stands at around 93% and 79%, respectively.
Meanwhile, the US government shutdown entered its ninth day, capping USD strength and providing a tailwind for gold. Political gridlock persisted in the Senate as lawmakers failed for the sixth time to advance funding measures, while furloughs of federal workers continued to pose risks to the labor market.
Adding to the mix, a senior Russian lawmaker warned that Moscow would intercept and destroy US Tomahawk missiles and their launch sites if Washington supplied them to Ukraine — a reminder that geopolitical risks remain in play, potentially limiting gold’s downside.
Technical outlook: gold must hold above $4,000 to maintain momentum
From a technical standpoint, gold has shown resilience above the lower boundary of its short-term ascending channel and rebounded from the key psychological support at $4,000. A sustained break below this level would confirm a corrective move, potentially targeting the next support near $3,948–3,947, followed by the $3,900 handle.
On the upside, a decisive move above the $4,035–4,036 region could push prices beyond Wednesday’s record highs near $4,059–4,060, with scope to test the channel resistance around $4,080. Continued buying interest above $4,100 would reinforce bullish momentum and open the door for an extension of the broader uptrend.
