Gold (XAU/USD) extended its pullback during Tuesday’s Asian session, retreating further from its all-time high and touching a new intraday low near the $4,331–$4,330 range. The US Dollar (USD) gained strength for a third consecutive day, triggering profit-taking among traders amid still overbought technical conditions on the daily chart. Additionally, a broadly positive sentiment across global equity markets weighed on demand for the safe-haven metal.
Still, concerns over a prolonged US government shutdown and dovish expectations surrounding the Federal Reserve’s (Fed) policy outlook may help limit further USD gains and offer some stability to gold prices. Persistent geopolitical risks and ongoing trade-related uncertainty are also likely to cap deeper declines in the non-yielding metal, suggesting that bearish momentum may remain limited for now.
Market drivers: Gold pressured by stronger USD, risk-on sentiment
The US Dollar continued to attract buyers for the third consecutive session, exerting additional downward pressure on gold prices in early Tuesday trading. Optimism surrounding easing US-China trade tensions also supported risk appetite, diverting flows away from safe-haven assets.
US President Donald Trump recently commented that a full-scale tariff on China would be unsustainable, adding that both sides are working toward what he described as a “fantastic deal.” However, he warned that failure to reach an agreement could result in potential tariffs of up to 155%, keeping investors’ focus squarely on upcoming trade negotiations between the two nations.
According to the CME Group’s FedWatch Tool, markets have nearly fully priced in 25-basis-point rate cuts at both the Fed’s October and December policy meetings. Such expectations could limit further USD appreciation and serve as a tailwind for gold, which tends to benefit from lower interest rate prospects.
Meanwhile, concerns persist over the ongoing US government shutdown, now entering its third week after the Senate voted for the 11th time against a reopening proposal. President Trump has blamed the opposition for stalling progress on border security and immigration policy, raising worries about potential economic fallout.
On the geopolitical front, Russian President Vladimir Putin has reportedly demanded that Ukraine cede the Donetsk Oblast as a condition to end the war, while hinting at possible concessions in southern Ukraine. Ukrainian President Volodymyr Zelenskyy has rejected these terms outright, maintaining that no occupied territory will be surrendered. The continued conflict adds a layer of geopolitical uncertainty that could lend some support to gold prices.
Investors are also awaiting the release of September’s US Consumer Price Index (CPI) data on Friday. The inflation figures are expected to guide expectations ahead of next week’s two-day Federal Open Market Committee (FOMC) meeting, which will likely determine gold’s next major directional move.
Technical outlook: Gold may attract buyers near $4,300
Gold prices continue to struggle in sustaining momentum above the $4,375–$4,380 resistance zone. The daily Relative Strength Index (RSI) remains in overbought territory, suggesting possible bullish exhaustion after recent highs.
A dip below the $4,330 level could attract fresh buying interest, with the $4,300 round figure expected to act as a strong support area. A decisive break below that level may expose the metal to further downside toward the $4,240 intermediate support and then the $4,210–$4,200 region.
On the upside, a sustained move above $4,375–$4,380 would likely confirm renewed bullish momentum. A breakout past the $4,400 psychological mark could open the door for another leg higher, extending the two-month uptrend in gold prices.
